On May 7, 2024 the City Manager approved the First Amendment in the amount of $7,587, increasing the Agreement’s total to $252,000. The First Amendment covered six new phones, associated licensing, and contingency for future needs.
DISCUSSION
VoIP (Voice over Internet Protocol) is a technology that allows the City to make and receive phone calls using its internet connection rather than traditional telephone lines. This system supports voice communication across all City departments, providing flexibility, scalability, and cost efficiency. It also allows for easier integration of additional features such as voicemail-to- email, remote access, and system-wide management—all essential for modern municipal operations.
The City Manager has authority to approve contract increases up to 10 percent of the original Agreement amount, which is $24,441. With the First Amendment totaling $7,587, the remaining approval authority is $16,854.
This Second Amendment seeks to allocate $16,850 to cover:
Carrier and regulatory fees that were not included in the original Agreement but have accrued since 2022
Taxes on Vonage invoices
Additional phones and licensing to support new City staff and operational needs.
These service fees were excluded from the original contract, as stated in the Agreement; however, they were not added to the contract’s not-to-exceed amount. Table 1 provides an example illustrating how recurring monthly service fees and taxes have steadily increased the actual cost of Vonage services over time.
Table 1 – July 2024 Invoice Showing Taxes and Fees Excluded from the Contract
Fee Type Amount Description
Carrier
Surcharge
Recovery Fee
$11.50
A pass-through fee used by the carrier to
recover costs related to third-party network
access and interconnection.
E911 Fee $190.00
A mandatory fee that funds emergency
response infrastructure and ensures accurate
caller location for 911 services.
Regulatory
Recovery Fee $948.10 A fee charged to recover the provider’s costs related to compliance with government-
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imposed regulations.
Regulatory
Recovery Fee
(POTS)
$0.00 Applies to analog telephone services; no
charge applied for this invoice period.
Taxes $1,143.97 Includes applicable federal, state, and local taxes related to telecommunications services.
Total Charges $2,293.57 July 2024 Total Charges Excluded in the Contract
These costs accumulate each month and, over time, have created a need to increase the contract’s not-to-exceed amount to remain in compliance with City purchasing policies. While these added costs are covered within the current IT Division budget, staff is seeking City Manager to approval to increase the authorized contract value by $16,850, resulting in a revised not- to-exceed amount of $268,850.
FISCAL IMPACT
The proposed Fiscal Year 2024-25 Operating Budget includes sufficient funds for this purpose.
ATTACHMENTS
1. Vonage Business Inc. Agreement (2022)
2. First Amendment to Vonage Business Inc., Agreement
3. Proposed Second Amendment to Vonage Business Inc
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Sales Order# 626490
Account ID: 911727
Date: 10/07/2022
Sales Person: Sabrina Susuras
Pricing Expires 11/05/2022
Requested Install Date 12/01/2022
Term: 36 Months
Customer Billing Address Customer Install Address
Douglas McBratney Douglas McBratney
Skate Park Skate Park
100 Civic Center Dr 20028 Lake Forest Dr
Lake Forest, CA 92630-9202 Lake Forest, CA 92630
US US
Previous Contract One Time Total* $0.00 Monthly Total* $-135.60 *plus applicable Taxes and Fees
Renewal
One Time Monthly
Product Quantity Unit Price Ext Price Unit Price Ext Price ---------------
Premier Plus 3 $0.00 $0.00 $25.00 $75.00
Includes DID, Premium features, Voicemail, Visual Voicemail (Voicemail to Text), and Unlimited Local and LD (w/ Fair Use Policy) + MobileConnect Trio with IM/P and 8 User Desktop Sharing, Hub integration. Also includes one collaborate bridge for up to 30 voice / 15 video participants. Single conferencing access number per account subject to Fair Use Policy.
Polycom VVX601 POE Rental 3 $0.00 $0.00 $9.00 $27.00
Polycom VVX601 POE Rental Executive 16 Line HD Gig IP Phone with Touchscreen Display. Does not include power brick.
Long Distance Outbound (2.5) and
Inbound Toll Free 1 $0.00 $0.00 $0.00 $0.00
One Time Total* $0.00 Monthly Total* $102.00
*plus applicable Taxes and Fees Previous One Time $0.00 Previous Monthly $135.60 Difference $0.00 Difference $-33.60
Customer Vonage Business Inc.
Signature Signature
Printed Name of Authorized Signatory Printed Name of Authorized Signatory Title Title
CALL 888.697.7437
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Robert Pequeño
12/8/2022
Mayor
Vincent DePasquale
Sr. Director of Customer Success
Dec 30, 2022
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300
Sales Order# 626490
Account ID: 911727
Date: 10/07/2022
Sales Person: Sabrina Susuras
Pricing Expires 11/05/2022
Requested Install Date 12/01/2022
Term: 36 Months
Date Date
This Sales Order constitutes the valid and binding agreement between Vonage Business and the Customer identified above to purchase and use the Vonage Business products and services specified in this Sales Order. This Sales Order, together with any terms or conditions set forth in any applicable amendment, addendum, exhibit or schedule to this Sales Order, is subject to and governed by the Vonage Enterprise Terms of Service set forth at https://enterprise.vonage.com/terms (the "Service Terms"), which include provisions relating to payment, collection, early termination, limitations of liability and E911 service, and which are hereby made part of and incorporated by this reference into the Sales Order. Any capitalized terms not otherwise defined in this Sales Order shall have the meaning ascribed to such terms in the Service Terms. The person whose signature appears above warrants that they are authorized to sign this Sales Order and to acknowledge and accept the Service Terms.
Prices do not include applicable Taxes, Fees and Shipping and Handling charges.
CALL 888.697.7437
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
301
Sales Order# 626489
Account ID: 908654
Date: 10/07/2022
Sales Person: Sabrina Susuras
Pricing Expires 11/05/2022
Requested Install Date 12/01/2022
Term: 36 Months
Customer Billing Address Customer Install Address
Douglas McBratney Douglas McBratney
City of Lake Forest City of Lake Forest
100 Civic Center Dr 100 Civic Center Dr
Lake Forest, CA 92630-9202 Lake Forest, CA 92630-9202 US US
Previous Contract One Time Total* $0.00 Monthly Total* $-6,697.50 *plus applicable Taxes and Fees
Renewal
One Time Monthly
Product Quantity Unit Price Ext Price Unit Price Ext Price ---------------
Polycom 6000 Rental 11 $0.00 $0.00 $18.00 $198.00
Rental of phone handset. Does not include power brick.
Managed Analog Port 5 $0.00 $0.00 $8.00 $40.00
Single Call Session with Analog Handoff for Analog Devices. Not to be used for fax machines, credit card machines, postage meters or alarm lines. ATA may be included.
Managed Router Rental - Ethernet up to
50 mb 1 $0.00 $0.00 $15.00 $15.00
Router to support ethernet delivery up to 50 mbps. Equipment must be returned at end of contract.
Premier Plus 131 $0.00 $0.00 $25.00 $3,275.00
Includes DID, Premium features, Voicemail, Visual Voicemail (Voicemail to Text), and Unlimited Local and LD (w/ Fair Use Policy) + MobileConnect Trio with IM/P and 8 User Desktop Sharing, Hub integration. Also includes one collaborate bridge for up to 30 voice / 15 video participants. Single conferencing access number per account subject to Fair Use Policy.
Polycom VVX601 POE Rental 119 $0.00 $0.00 $9.00 $1,071.00 Polycom VVX601 POE Rental Executive 16 Line HD Gig IP Phone with Touchscreen Display. Does not include power brick.
Auto Attendant 10 $0.00 $0.00 $5.00 $50.00
Answers and routes calls to 11 destinations. Includes a DID, and Dial by Name for all Stations.
SmartWAN Mono-30 Mbps-Rental 1 $0.00 $0.00 $71.00 $71.00 SmartWAN 30 Mbps throughput. Seamless fail-over, WAN Optimization, Secure tunnel, Read-only portal. VeloCloud VCE-510-30 or VCE-520-30.
Premier Basic 52 $0.00 $0.00 $13.00 $676.00
Lobby or Common Area phone. Includes DID, IB/OB, 3way, Transfer, CallerID only. Includes 200 LD mins. Voicemail NOT included.
Polycom VVX Color Expansion Module
CALL 888.697.7437
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Sales Order# 626489
Account ID: 908654
Date: 10/07/2022
Sales Person: Sabrina Susuras
Pricing Expires 11/05/2022
Requested Install Date 12/01/2022
Term: 36 Months
Rental 8 $0.00 $0.00 $6.00 $48.00
28 button sidecar with color LCD screen and self-labeling keys for VVX series. Up to 3 Modules per VVX phone. Includes AUX cable and attachment hardware.
Polycom VVX201 POE Rental 42 $0.00 $0.00 $3.00 $126.00
Polycom VVX201 POE Rental 2-line Desktop GigE Phone with HD Voice. Does not include power brick.
Managed Ethernet Loop 5 Mbps 1 $0.00 $0.00 $500.00 $500.00 Static bandwidth ethernet last mile loop delivered via copper or fiber as available. Internet bandwidth and router sold separately.
Unified Mailbox 23 $0.00 $0.00 $5.00 $115.00
Includes 30 Minutes of Storage, and voicemail conversion to .wav file Hunt Group 22 $0.00 $0.00 $4.00 $88.00
Lead # for a group of extensions / phones. 5 Group ringing options with overflow.
Long Distance Outbound (2.5) and
Inbound Toll Free 1 $0.00 $0.00 $0.00 $0.00
AudioConnect Audio Conferencing - Flat
Rate 1 $0.00 $0.00 $20.00 $20.00
Reservation-less Bridge supports up to 1000 callers (No TF). Call recording included. Web portal access to manage conferences and call recording.
DID Single Number 1 $0.00 $0.00 $0.25 $0.25
Porting or Activating and Maintaining Single DID's (non-blocks) Polycom VVX 250 POE - Rental 7 $0.00 $0.00 $3.00 $21.00 Polycom VVX 250 POE Rental 2-line Desktop Phone with HD Voice. Does not include power supply.
Group Page 10 1 $0.00 $0.00 $8.00 $8.00
Supports up to 10 Complete/Select Premium Stations. Single zone, single location.
One Time Total* $0.00 Monthly Total* $6,322.25
*plus applicable Taxes and Fees Previous One Time $0.00 Previous Monthly $6,697.50 Difference $0.00 Difference $-375.25
Customer Vonage Business Inc.
Signature Signature
Printed Name of Authorized Signatory Printed Name of Authorized Signatory CALL 888.697.7437
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Robert Pequeño
Vincent DePasquale
Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
303
Sales Order# 626489
Account ID: 908654
Date: 10/07/2022
Sales Person: Sabrina Susuras
Pricing Expires 11/05/2022
Requested Install Date 12/01/2022
Term: 36 Months
Title Title
Date Date
This Sales Order constitutes the valid and binding agreement between Vonage Business and the Customer identified above to purchase and use the Vonage Business products and services specified in this Sales Order. This Sales Order, together with any terms or conditions set forth in any applicable amendment, addendum, exhibit or schedule to this Sales Order, is subject to and governed by the Vonage Enterprise Terms of Service set forth at https://enterprise.vonage.com/terms (the "Service Terms"), which include provisions relating to payment, collection, early termination, limitations of liability and E911 service, and which are hereby made part of and incorporated by this reference into the Sales Order. Any capitalized terms not otherwise defined in this Sales Order shall have the meaning ascribed to such terms in the Service Terms. The person whose signature appears above warrants that they are authorized to sign this Sales Order and to acknowledge and accept the Service Terms.
Prices do not include applicable Taxes, Fees and Shipping and Handling charges.
CALL 888.697.7437
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF 12/8/2022
Mayor
Sr. Director of Customer Success
Dec 30, 2022
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304
Sales Order# 626491
Account ID: 911724
Date: 10/07/2022
Sales Person: Sabrina Susuras
Pricing Expires 11/05/2022
Requested Install Date 12/01/2022
Term: 36 Months
Customer Billing Address Customer Install Address
Douglas McBratney Douglas McBratney
Sports Park Sports Park
100 Civic Center Dr 28000 Rancho Pkwy
Lake Forest, CA 92630-9202 Lake Forest, CA 92630-8723 US US
Previous Contract One Time Total* $0.00 Monthly Total* $-398.00 *plus applicable Taxes and Fees
Renewal
One Time Monthly
Product Quantity Unit Price Ext Price Unit Price Ext Price ---------------
Premier Plus 5 $0.00 $0.00 $25.00 $125.00
Includes DID, Premium features, Voicemail, Visual Voicemail (Voicemail to Text), and Unlimited Local and LD (w/ Fair Use Policy) + MobileConnect Trio with IM/P and 8 User Desktop Sharing, Hub integration. Also includes one collaborate bridge for up to 30 voice / 15 video participants. Single conferencing access number per account subject to Fair Use Policy.
Polycom VVX601 POE Rental 4 $0.00 $0.00 $9.00 $36.00
Polycom VVX601 POE Rental Executive 16 Line HD Gig IP Phone with Touchscreen Display. Does not include power brick.
Premier Basic 12 $0.00 $0.00 $13.00 $156.00
Lobby or Common Area phone. Includes DID, IB/OB, 3way, Transfer, CallerID only. Includes 200 LD mins. Voicemail NOT included.
Polycom VVX201 POE Rental 12 $0.00 $0.00 $3.00 $36.00
Polycom VVX201 POE Rental 2-line Desktop GigE Phone with HD Voice. Does not include power brick.
Hunt Group 1 $0.00 $0.00 $4.00 $4.00
Lead # for a group of extensions / phones. 5 Group ringing options with overflow.
Long Distance Outbound (2.5) and
Inbound Toll Free 1 $0.00 $0.00 $0.00 $0.00
Group Page 10 1 $0.00 $0.00 $8.00 $8.00
Supports up to 10 Complete/Select Premium Stations. Single zone, single location.
One Time Total* $0.00 Monthly Total* $365.00
*plus applicable Taxes and Fees
CALL 888.697.7437
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
305
Sales Order# 626491
Account ID: 911724
Date: 10/07/2022
Sales Person: Sabrina Susuras
Pricing Expires 11/05/2022
Requested Install Date 12/01/2022
Term: 36 Months
Previous One Time $0.00 Previous Monthly $398.00
Difference $0.00 Difference $-33.00
Customer Vonage Business Inc.
Signature Signature
Printed Name of Authorized Signatory Printed Name of Authorized Signatory Title Title
Date Date
This Sales Order constitutes the valid and binding agreement between Vonage Business and the Customer identified above to purchase and use the Vonage Business products and services specified in this Sales Order. This Sales Order, together with any terms or conditions set forth in any applicable amendment, addendum, exhibit or schedule to this Sales Order, is subject to and governed by the Vonage Enterprise Terms of Service set forth at https://enterprise.vonage.com/terms (the "Service Terms"), which include provisions relating to payment, collection, early termination, limitations of liability and E911 service, and which are hereby made part of and incorporated by this reference into the Sales Order. Any capitalized terms not otherwise defined in this Sales Order shall have the meaning ascribed to such terms in the Service Terms. The person whose signature appears above warrants that they are authorized to sign this Sales Order and to acknowledge and accept the Service Terms.
Prices do not include applicable Taxes, Fees and Shipping and Handling charges.
CALL 888.697.7437
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Robert Pequeño
12/8/2022
Mayor
Vincent DePasquale
Sr. Director of Customer Success
Dec 30, 2022
Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
306
Vonage Business Communications
Global Terms of Service Agreement
Effective Date: October 5, 2020
THESE ONLINE TERMS OF SERVICE (“Service Terms” or “Terms of Service”), including the Sales Order(s), which by this reference are incorporated herein (“Agreement”), govern Customer’s use of the Services provided by Vonage and its Affiliates (individually or collectively “Vonage”), and constitutes a binding agreement between Vonage and the Customer legal entity identified in a Sales Order (“Customer”). Vonage and Customer may be individually referred to as a “Party” or collectively as the “Parties”.
The Vonage Affiliate providing Services under a Sales Order shall be as set forth in Schedule 2 (based on Customer’s domicile), unless otherwise set forth in a Sales Order), and all references to “Vonage” shall be deemed to refer to such Vonage Affiliate. Vonage may update the applicable Vonage Affiliate (within domicile) by providing reasonable written notice in accordance with this Agreement.
Country-specific terms and conditions are set forth in Schedule 3 and shall apply to Customers domiciled in those countries.
Vonage provides services and equipment intended solely for business use, pursuant to the terms and conditions set forth in this Agreement, and on the condition that customer Accepts a Sales Order and complies with this Agreement. By Accepting a Sales Order, Customer (a) accepts this Agreement and agrees that Customer is legally bound by its terms; and (b) represents and warrants that it has the right, power, and authority to enter into this Agreement on behalf of the corporation, governmental organization, or other legal entity, and to bind such organization to these Service Terms. If Customer does not agree to the terms of this Agreement, Customer may not download, install, or use the Services or Vonage Equipment.
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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1. DEFINITIONS
Capitalized terms used but not otherwise defined in this Agreement will have the meaning ascribed to such terms in Schedule 1 and/or in the Sales Order.
2. SUBSCRIPTION SERVICES; SALES ORDERS
A. Subscription Services
a. Pursuant to the terms of this A greement, Vonage shall provide to Customer: (i) telephony, conferencing, messaging and related subscription -based services as described in one or more Sales Order(s), and the Service Descriptions which describe the features and functionality of the Services, or other documentation Vonage may provide from time-to-time; and (ii) the set -up, installation, implementation, configuration, and other Professional Services identified in Sales Orders (if applicable) and a Statement of Work (if applicable) in connection with the Subscription Services. Customer’s use of the Subscription Services are governed by Vonage’s Acceptable Use Policy. b. Subject to Customer’s compliance with this Agreement, Vonage hereby grants Customer and its Affiliates, a limited, revocable, personal, non- exclusive, non- transferable, and non -sublicensable license during the Service Term to: (i) provide Authorized Users access to the Services via Customer’s Account; and (ii) download, install, and use Software made available by Vonage in connection with the Services, subject to any additional terms and conditions accompanying such Software, as applicable.
c. Certain Software Vonage provided to Customer may contain third- party software ("Third-Party Software"), including open source software. Use of such Third- Party Software may be governed by separate co pyright notices and license provisions, which will be provided to Customer and which are incorporated by reference into this Agreement. Such provisions shall govern the use of Third- Party Software. Customer agrees to comply with the terms and conditions of all end user license agreements accompanying any Software (including Third-Party Software) or plug-ins to such Software distributed in connection with the Service. All end user licenses shall immediately terminate on the date that the Service expires, or this Agreement is terminated. d. To access the Services, Customer must maintain an active Account in good standing.
Customer shall provide and maintain accurate, complete, and up -to-date information within its Account. Customer is solely responsible for th e activity that occurs on its Account (which includes its sub -Accounts), and for keeping its Account credentials secure. Vonage will not be liable for losses caused by any unauthorized use of the Account; provided, however, that Customer shall not be respo nsible for unauthorized Charges on its Account to the extent that it took reasonable precautions and the unauthorized use is demonstrated to be solely due to Vonage’s gross negligence or willful DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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misconduct. Customer represents and warrants that it is duly authorized to do business and use the Services in all jurisdictions in which Customer operates. Customer must notify Vonage promptly of any change in Customer’s eligibility to use the Services, breach of security, or any unauthorized use of Customer’s Account. Notwithstanding closure of Customer’s Account, Vonage may retain Customer Data as reasonably necessary for compliance with applicable law.
e. The foregoing licenses shall extend to Customer Affiliates, provided that such Customer Affiliates are acting via Customer’s Account (or subaccounts thereof), and provided further that Customer remains liable to Vonage for all acts and omissions of such Affiliates (or any other entities authorized by Customer to use the Services or act via Customer’s Account) as if they were Customer’s own acts or omissions, including payment for the Services.
f. Vonage may use or rely on one or more licensors, service providers, and/or equipment providers or equipment lessors whose products, equipment and/or services are provided in conjunction with, or incorporated into, the Services and/or Vonage Equipment ("Third- Party Services"). Such Third- Party Services may also be provided under Vonage's trademarks or otherwise branded as a Vonage Service. Third- Party Services may be governed by Third-Party Terms , or identified in documentation or on other media delivered with the Third- Party Services and will be provided to Customer; such Third- Party Terms are incorporated by reference into this Agreement and shall govern the use of Third-Party Services. Customer agrees to comply with such terms and conditions of all Third-Party Services. Such Third- Party Terms are deemed to be between Vonage and Customer and do not create a contractual relationship between Customer and such third party. Any non-compliance with terms and conditions of Third- Party Services shall be considered non-compliance with this Agreement.
B. CX Contact Center Services
Terms applicable to Vonage Contact Center Services (including VCXC-CC Extension and CX Cloud Express) are set forth here. The Service Description and the scope of Professional Services for the Vonage CX Contact Center Service identified on the Sales Order is set forth here.
C. Sales Order Submission and Acceptance
Customer may order Subscription Services by accepting or executing one or more Sales Orders in a manner and format as required by Vonage, including via Vonage’s ordering portal. Applicable Professional Service Fees and/or installation Charges will be set forth in a Sales Order. Vonage may, in its sole discretion, accept or reject a Sales Order prior to Acceptance or execution. Once a Sales Order is accepted or executed, along with an DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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executed SOW (if applicable), Vonage shall provision the Subscription Services and provide access credentials to the Account or applicable sub- account thereof. Customer may also order additional Subscription Services via Vonage’s online ordering portal (described below).
D. Service Term and Automatic Renewal
Each Sales Order shall state the Initial Term. The Initial Term will commence on the date set forth in t he Sales Order as the Subscription Service Term Start Date. Sales Orders which describe delivery of Subscription Services to multiple Customer Locations will identify multiple Subscription Service Term Start Dates and Subscription Terms. The Initial Term will automatically renew for successive periods of the same length as the previous Initial Term or Renewal Term (as applicable) except where either Party provides written notice of intent not to renew at least ninety days prior to the end of the then-current Initial Term or Renewal Term. Upon termination of the applicable Initial Term or Renewal Term, Vonage will not be obligated to furnish the Subscription Services to Customer; provided however, if Customer continues to use the Subscription Services after termination of the Initial Term or Renewal Term, such use shall be on a month- to-month basis and Customer shall be obligated to pay for such Subscription Services at Vonage’s then-current monthly rates. Either party may terminate such month- to-month term by providing at least thirty days advance notice. Except as expressly provided in the applicable Sales Order, renewal of promotional or one-time priced subscriptions may be, in Vonage’s discretion, at Vonage’s applicable list price in effect at the commencem ent of the applicable Renewal Term.
E. Service Adds; Co-Term
Services added to an existing Customer Location will be deemed to be part of the existing Sales Order for the purposes of determining the remaining Subscription Term for such additional Servic e (i.e. co- term). However, some Services require a minimum commitment term which may not be co-terminus with the Subscription Term of the existing Sales Order (e.g. Vonage Equipment and CX Contact Center Services). For any such Services, a separate Sales Order is required, and the Subscription Term will be set forth in the applicable Sales Order. Services ordered for additional Customer Locations (i.e. multi-locations) will have separate Subscription Terms as stated in the Sales Order unless the Parties mutually agree otherwise via an addendum executed by both Parties.
F. Service Platform Migration
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When Customer migrates from the Vonage Enterprise service platform to the VBC service platform, Customer acknowledges that upon Acceptance of a VBC Sales Or der, the Vonage Enterprise services and all associated agreements shall be terminated, effective upon migration of the services.
G. Changes
Vonage may update, upgrade, discontinue, or otherwise modify the Services or specific Services in whole or in part in accordance with this section. Vonage shall make commercially reasonable efforts to provide at least ninety days’ notice prior to any material changes of the specific Services, subject without limitation to urgency and security issues. Customer shall use commercially reasonable efforts to cooperate with Vonage to effect modifications to the Services, including by promptly implementing all fixes, updates, upgrades, and replacements of Software as reasonably required by Vonage, and Vonage shall not be responsible for Customer’s failure to do so.
Notwithstanding the foregoing, modifications to the Services shall not materially reduce the features, level of functionality, performance, availability, or security of the Services during the Service Term, unless Vonage makes available to Customer, at no additional cost, an alternative Service that is substantially equivalent to the modified Service; provided that Customer’s sole remedy for non-compliance with the foregoing shall be the right to terminate any affected Service within ninety days of receiving written notice of the modification.
H. Reservation of Rights
Notwithstanding anything to the co ntrary herein, Vonage reserves the right, but is not obligated, to (i) monitor and review Customer’s use of the Services, including to ensure Customer’s compliance with the Agreement; (ii) reject, refuse to transmit, block, or remove any content (including Customer Data); and (iii) access, read, preserve, or disclose any information that Vonage reasonably believes is necessary to (a) comply with applicable law, regulation, legal process, or government request, (b) enforce the Agreement, including investigat ion of potential violations hereof, (c) detect, prevent, or otherwise address fraud, security or technical issues, (d) respond to Customer’s support requests, or (e) protect the rights, property or safety of Vonage, its customers, its customers’ end users, and/or the public. Customer agrees to provide Vonage with any information Vonage reasonably requests to investigate and resolve issues relating to Customer’s Account.
I. Required Maintenance; Customer Support
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a. Vonage has the right to perform repair and maintenance or to upgrade, update or enhance (collectively, the "Maintenance") its network, infrastructure, website(s), Services and/or Vonage Equipment with prior notice per the Service Level Agreement if such Maintenance would cause a partial or full disruption of the Services. b. Customer will timely report any issues, trouble or problems affecting Service to Vonage using a Customer-initiated trouble ticket (a “Trouble Ticket”). Trouble Ticket procedures and additional information for Vonage support can be found here. Calls to and from Vonage customer service, sales or other representatives may be recorded and/or monitored for quality assurance and training purposes. Customer's sole remedies for any non-performance, outages, failures to deliver or defects in Service are set forth in the applicable service level agreement and these Service Terms.
J. Voice-to-Text and Text-to-Voice Limitations.
Certain Vonage Services may provide a function that allows voicemails to be converted to text and vice- versa. Customer understands and agrees that Vonage’s voice- to-text ("VTT") and text -to-voice ("TTV") features may not accurately transcribe voicemails or articulate text messages , respectively. Customer is solely responsible for checking the original message and verifying the accuracy of the message when using any VTT or TTV features. Vonage expressly disclaims all liability with respect to the conversion of voicemails to text or vice-versa.
K. Acceptable Use Policy
Customer shall not, and shall ensure that end users and Affiliates do not, and shall not authorize, assist, or enable any other third party to, use the Services in any manner that violates the AUP.
L. No Resale
Customer represents and warrants that it will be the ultimate end user of the Service.
Customer shall not in any way resell, license, permit nor allow any t hird party to use the Services without receiving Vonage's prior written consent.
M. Electronic Recording
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Customer acknowledges that there are laws governing the electronic recording of telephone conversations and that Vonage is not liable for any illegal use of the Services.
It is Customer's responsibility to determine and comply in full with its own compliance obligations. No Services or products offered by Vonage are represented or warranted to comply with electronic recording laws. Customer agrees that Vonage may, in its sole discretion, record any call between Customer and Vonage for quality control and training purposes.
3. FEES AND PAYMENT
A. Invoices; Billing and Payment Terms
Vonage will invoice Customer pursuant to the Subscription Services Invoicing Frequency and Customer shall pay pursuant to the Payment Terms as set forth in the Sales Order.
Charges are based on Subscription Services and equipment purchased and not actual usage. Recurring charges for the Subscription Services begin on the Subscription Service Term Start Date and will continue for the Term. Payment obligations are non-cancellable, and Charges paid are non- refundable unless otherwise set forth in this Agreement.
Quantities purchased cannot be decreased during the relevant Subscription Term without the imposition of the applicable early termination charges. Usage based Charges (including Charges for international calls), Marketplace Service Charges, Change Order fees, and ancillary expenses (e.g. incurred in connection with the Professional Services, if any, such as travel, hotel and subsistence expenses; such expenses to be invoiced by Vonage at cost) are payable in arrears. Equipment purchase Charges are billable upon Acceptance of a Sales Order. Professional Services provided on a fixed price basis will be billed in advance and Professional Services provided on a time and material basis will be billed as completed monthly in arrears pursuant to the Payment Terms. An invoice for Professional Services will be sent promptly following Acceptance of the Sales Order, with payment due per the Payment Terms. Invoices will be sent by email to the address specified in Customer’s Account. The foregoing shall not apply to In-App Purchases. The terms of service for the app store from which C ustomer downloaded the mobile application shall govern the Payment Terms and taxes and fees for the in- app Services, if any, and such terms are hereby incorporated by reference.
Overdue amounts other than amounts disputed in good faith bear interest at the lower of
1.5% per month or the maximum rate allowed by governing law. Vonage may suspend the Subscription Services upon prior written notice if Customer’s payment on any undisputed amounts remains overdue at the end of the tenth day following such notice. Customer agrees to supply Vonage with the information necessary for Vonage to complete an initial credit evaluation prior to providing Customer with access to the Services or the Vonage Equipment. Vonage may also update its information regarding Customer’s credit rating from time to time. Vonage may limit Customer’s purchasing of DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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additional Services or Vonage Equipment or require another form of payment such as auto-payment in its reasonable discretion based on changes in Customer’s creditworthiness or habitual payment delinquency.
B. Pricing
Pricing shall be set forth in the applicable Accepted Sales Order or as stated in the Vonage ordering portal and shall remain fixed until the end of the applicable Subscription Term. Upon auto- renewal of the Subscription Services, the Subscription Charges will increase by 7%. In the event Vonage continues to provide Services to Customer on a month-to-month basis following a committed term, Vonage reserves the right to increase pricing to Vonage’s then-current month-to-month pricing.
C. Commitment
Customer agrees it is responsible for the full value of each Sales Order effective upon Acceptance of the applicable Sales Order, subject to termination due to Vonage’s uncured default. Notwithstanding anything to the contrary herein, if Subscription Services are reduced or terminated other than due to a Party’s uncured default, all Charges due under the reduced or terminated Sales Order will be accelerated and Customer shall pay Vonage the sum of all unpaid amounts for Subscription Services actually provided, plu s the remaining contracted Charges as of the date of termination through the end of the Subscription Term stated in the Sales Order(s), as well as any additional incurred Charges (e.g. usage, Equipment purchases, etc.); or, if such termination is prior to the Subscription Service Term Start Date, the total amount of the Sales Order, and applicable Taxes and Fees on all of the foregoing.
D. Taxes and Fees
Prices for Subscription Services and Equipment purchases do not include applicable Taxes, Fees, Duty and Customs charges. Customer will be solely liable for and will pay upon demand all Taxes, Fees, Duty and Customs charges associated with Customer’s purchase of Equipment, and access to or use of the Services as set forth in the applicable Invoice, and shall not deduct any such amounts, or any other withholdings, set-offs, or deductions, from owed amounts, but will not be responsible for taxes based on Vonage’s net income. Customer may present Vonage with an exemption certificate eliminating Customer’s and Vonage’s liability to pay certain Taxes. Once Vonage has approved the exemption certificate in writing, Customer shall be exempt from those Taxes on a go- forward basis. If a tax authority determines that Customer is not exempt from Taxes and assesses those Taxes, Customer shall pay those Taxes to Vonage, plus any DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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applicable interest or penalties. Customer may be charged Taxes and Fees by a marketing partner or authorized distributor for non-Vonage products and services sold or licensed by that marketing partner or authorized distributor in connection with a Sales Order.
In addition, a regulatory recovery fee for every phone number assigned to Customer's account, including toll free and virtual numbers, may be charged monthly to offset costs incurred by V onage in complying with inquiries and obligations imposed by regulatory bodies/governments and related legal and billing expenses. This recovery fee may also include recovery of costs for legal, intellectual property, cybersecurity, compliance and other related expenses, including those related to number portability, customer privacy protection and anti-fraud protection. This fee is not a tax or charge required or assessed by any government and may be recovered by Vonage through imposition of a surcharge on the cost of the Service.
E. Billing Disputes
Billing disputes must be initiated within ninety days of the disputed invoice date. Upon expiration of such ninety -day period, Customer waives its right to dispute any fees paid or payable to Vonage. The Par ties will work together in good faith to resolve billing disputes. A pending billing dispute shall not exempt Customer from timely paying any undisputed amounts. Other than as stated in this Agreement, fees paid are non- refundable.
4. PROFESSIONAL SERVICES
A. Performance
a. Vonage will provide and Customer shall pay for Professional Services (set up/installation Charges) as applicable and as specified in the Sales Order(s) and/or SOW using trained and qualified personnel, who will provide such Professional Services in a professional and workmanlike manner.
b. Customer’s exclusive remedy for breach of the foregoing shall be the re-performance of such Professional Services, except where Vonage is unable to re- perform the Professional Services, in whic h case, Customer may recover fees paid with respect to such deficient Professional Services by written claim no later than ninety days after the claimed deficient performance.
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c. Professional Services are available either on a time- and-materials or fixed-fee basis (as determined by Vonage) as described in the relevant Sales Order and/or SOW. Professional Service Fees may be subject to change if Customer modifies the scope of the Services or delays the Services to be installed. d. A change to the scope or execution of the Professional Services shall be agreed via Change Order prior to implementation of the changes. The Change Order shall set out the proposed changes and the likely effect on the Professional Services and/or the Professional Service Charges.
e. Upon completion of the Professional Services, if the Customer uses the Subscription Services or part thereof for any purpose other than for testing, such use shall constitute Acceptance of the Subscription Services.
f. Vonage may subcontract the performance of, or Customer may utilize a third- party to perform any or all of the Professional Services. Any subcontract by Vonage shall not affect Vonage’s liability to the Customer for the performance of its contractual obligations, and Customer shall be solely responsible for any Professional Services performed by Customer’s third-party.
B. Scheduling
The Parties will mutually agree upon the scheduling of Professional Services ordered by the Customer. Vonage shall use all reasonable efforts to meet the agreed-upon schedule.
In the event Customer reschedules or cancels scheduled Professional Services, Vonage shall make reasonable efforts to mitigate incurred expenses and reschedule its resources to other engagements; provided that, to the extent Vonage cannot reasonably avoid such expenses or reschedule the applicable resources, Customer shall be responsible for such losses. In addition, in the event Customer reschedules the Professional Services and the rescheduling is not due to delays caused by Vonage, the Subscription Service Term Start Date will commence on the date stated in the Sales Order unless otherwise agreed by the Parties in writing.
C. Cooperation
Customer shall cooperate reasonably, timely, and in good faith with Vonage (including its subcontractors and personnel) in its performance of Professional Services, including by providing to Vonage in a timely manner and without charge (a) support as reasonably requested by Vonage; (b) information regarding health and safety rules and regulations and any other reasonable security requirements that apply at the applicable service location; (c) physical space, equipment, telephone and internet access, and acc ess to other facilities; (d) access to appropriate and knowledgeable personnel; and (e) as DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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applicable, permissions, consents, or authorizations reasonably necessary to activate, maintain, inspect, or repair applicable Services or Vonage Equipment, including (if applicable) the right to access and enter the applicable service location upon reasonable prior notice.
D. Special Install Costs
Vonage may charge, and Customer shall pay, all recurring and nonrecurring costs, Charges and expenses incurred by Vonage for Customer’s benefit in connection with non- standard installation, delivery or implementation of the Services (collectively, the “Special Install Costs”). For clarification and by way of example, standard installation does not include (and the follow ing may comprise a portion of any Special Install Costs) core drilling, wiring extensions for excessive distances, installation of new conduit runs, installation of water proof shielding, installation of aerial circuit runs, or removal of hazard materials, as determined by Vonage Business at its sole discretion, as well as after-hours installation of Services (“Non -Standard Installation”). Non- Standard Installation will be purchased by Customer as an additional Service. Non- Standard Installation is the installation of Services Monday to Friday between 5pm to 8am (local time), any time on Saturday and/or Sunday, and holidays. Non- Standard Installation will include appointment coordination, the provisioning of the Service, basic external wiring, call tests, and remote Vonage technical support as needed. Special Install Costs will be invoiced to Customer as soon as practicable following the Subscription Service Term Start Date for the applicable Services.
E. Telephone Number Porting
Vonage’s policies and procedures for telephone number porting is set forth here.
5. FREE TRIAL SERVICES; BETA SERVICES
A. Free Trial Services
If Customer’s Sales Order or registration with Vonage includes a free trial (“Free Services”), then the applicable Services will be made available to Customer until (i) the end of the free trial period; (ii) the Subscription Service Term Start Date for Free Services, or (iii) the ter mination of Free Services for cause by Vonage, whichever is earlier. Any additional terms upon which the Free Services are provided as part of the trial registration process, are incorporated herein. Use of Free Services is subject to the terms and conditions of this Agreement. Customer agrees that Vonage, in its sole discretion and for DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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any or no reason, may terminate Customer’s access to the Free Services or any part thereof.
B. Beta Services
Certain Services or Software may be designated or offered as a beta version ("Beta Version") of a Service or Software, which may or may not be released as a full commercial service in the future. Customer may choose to try such Beta Services or not in its sole discretion. Any use of Beta Services is subject to this Agreement. Customer agrees that Beta Versions may contain errors. The fact and existence of any Beta Version shall be deemed to be Vonage Confidential Information under this Agreement.
NOTWITHSTANDING SECTION 11 (INDEMNIFICATION), VONAGE SHALL HAVE NO LIABILITY NOR INDEMNIFICATION OBLIGATIONS OF ANY KIND; WHERE LIABILITY CANNOT BE EXCLUDED BY APPLICABLE LAW, VONAGE’S LIABILITY IS LIMITED TO $500.00 USD. CUSTOMER WILL BE FULLY LIABLE FOR CUSTOMER’S USE OF
SERVICES DURING ANY FREE TRIAL OR BETA SERVICE PERI OD, ITS INDEMNIFICATION OBLIGATIONS AND ANY BREACH OF THIS AGREEMENT.
6. TECHNICAL REQUIREMENTS; EQUIPMENT
a. It is Customer’s sole responsibility to ensure that it meets the minimum hardware, Software, connectivity, and other technical requirements for accessing the Subscription Services. Vonage’s minimum technical prerequisites are available upon request. b. Customer understands, acknowledges, and agrees that: (i) Customer must have a high-quality high-speed internet connection to use the Services; and (ii) Vonage is not providing an internet connection for Customer. Vonage does not control and is not responsible for: (a) Customer's internet connection; (b) the quality of Customer's internet connection; (c) any third party products and/or services rela ted to Customer's internet connection; or (d) problems with the Services that are caused by or related to Customer's internet connection. Vonage will not contact any of the internet providers and/or service or product providers on Customer's behalf.
c. Customer understands and acknowledges that use of the Services may require the use of certain Customer Equipment, Vonage Equipment, and/or Third- Party Equipment.
Vonage’s Equipment Policy is set forth here and shall apply to all equipment used, purchased or leased in connection with the Services.
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7. SUPPLEMENTAL TERMS; POLICIES; APPS MARKETPLACE
a. These Service Terms incorporate applicable Supplemental Terms set forth here, which shall apply to the specific Third- Party Services purchased by Customer, if any. Certain Subscription Services may be subject to other thir d-party terms which shall be made available to Customer prior to the purchase of such Third- Party Services, and shall supersede any conflicting terms with respect to such Subscription Services. b. These Service Terms also incorporate all additional terms, conditions and policies that are set forth in an addendum, schedule or exhibit, as well set forth in the Legal Policy Center here under the heading “Unified Communicat ions – VBC” (collectively, the “Additional Terms”), and supersede and replace all terms and conditions set forth in any documents issued by Customer, including purchase orders and specifications not agreed to in writing by the Parties.
c. Vonage may update or replace the AUP, Privacy Policy, Copyright Policy, Telephone Number Porting Policy and Emergency Services Acknowledgement (“Policies”) from time to time (a “Policy Change”), and will provide notice to Customer either via email to the address on file, or through Customer’s invoice. If such Policy Change is (a) applicable to Customer, and (b) materially and detrimentally impacts the Services, upon receipt of notice, Customer will have thirty days to notify Vonage that such changes are materially and adversely impacting, stating specifically which changes are impactful. The Parties will then a ttempt to reach a mutually agreeable workaround agreement. If agreement cannot be reached, Vonage may either waive or modify the requirement to Customer's reasonable satisfaction. If Vonage does neither, then Customer can either, within thirty days following Vonage’s notice of its refusal to waive or modify the requirement, accept the Policy Change or terminate those Services affected without termination liability, without the right to continue to use those Services thereafter. Notwithstanding the foregoing, Customer’s right to object or terminate shall not apply to Policy Changes required by applicable law, regulation or governmental authority, or to changes required to protect the security and operability of Vonage, the Services, Vonage’s other customers. d. Vonage offers third party products and services on its App Marketplace (“Third- Party Apps”). When Customer subscribes to use such Third-Party Apps, Customer shall agree separately to the required terms of use or service with such Third -Party App provider (“App Terms”), in addition to these Service Terms. Vonage is responsible for the billing and collection of amounts owed to such third- party provider and to tax and regulatory authorities, and will charge Customer’s method of payment. Charges for these services will appear on Customer’s monthly Vonage invoice. Vonage will also handle all billing questions. Customer acknowledges that Vonage is not responsible for support or technical assistance with respect to any Third-Party App and that Customer’s use of the App itself is subject to the App Terms; Customer shall direct its App questions and support requests directly to the provider of the Third -Party App at the contact email address or number set forth on the Marketplace and/or in the App Terms. However, C ustomer may only modify or terminate Third- Party Apps or related accounts through the App Marketplace in order to modify or terminate billing for such Third- Party Apps. Failure to DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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do so through the App Marketplace will not modify or terminate billing, for which Customer is liable. Customer is solely responsible for its use of the Third -Party App, and will indemnify Vonage and its Affiliates against any and all claims arising from Customer’s misuse of the Third-Party App or its breach of the App Terms. e. Vonage may enter into marketing arrangements with marketing partners (each a "Marketing Partner") or resale/distribution agreements with authorized distributors (each an "Authorized Distributor") who market Vonage Services to prospective customers who then subscribe to these Service Terms. When these Service Terms are accepted by a Customer, the Customer is considered a customer of Vonage only with respect to Vonage Services. As an example, if the distributor of internet services also markets Vonage- branded s olutions and a Customer subscribes to both internet services and Vonage Services with Vonage under these Service Terms, the customer is considered, with respect to Vonage Services, only a customer of Vonage. The terms, conditions and policies pursuant to a Marketing Partner or Authorized Distributor's contractual arrangement with Customer for other products and services may differ from these Terms of Service, Privacy Policy and other policies applied by Vonage to similarly situated customers, but such Marketing Partner's or Authorized Distributor's terms, conditions and policies will not apply to Vonage Services, nor supersede these Service Terms as applicable to Vonage Services.
8. INTELLECTUAL PROPERTY; CUSTOMER DATA AND DATA DELETION A. Customer Data.
As between Customer and Vonage, Customer owns and reserves all right, title, and interest in Customer Data. Customer authorizes Vonage to use the Customer Data to provide the Services and perform in accordance with the Agreement.
B. Retention and Deletion of Call Recordings and Voicemails.
Except as agreed by Vonage and Customer in writing, Vonage shall delete Call Recordings and Voicemails as follows:
a. if CX Contact Center Services, in accordance with data storage terms set forth in the CX Service Description set forth here;
b. if VBC Servic es, call recordings are retained until Customer deletes the data, or the Service(s) are cancelled, or until Customer utilizes all allotted storage space. Customer may download the data at any time prior to cancellation or termination of Service(s).
Voicemail messages are retained for 90 days from the date the message was recorded and 7 days after cancellation or termination of the Service(s).
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c. Following the stated retention periods, the VBC Call Recordings and Voicemails are purged.
C. Suggestions.
Customer’s suggested improvements to and feedback regarding the Services are not Confidential Information, and Customer grants to Vonage an unrestricted, irrevocable, fully paid -up, and non -exclusive right to use such suggestions and feedback for any purpose.
D. Vonage Services and Vonage Content.
Vonage owns and reserves all right, title and interest in and to the Services and all improvements, modifications, and derivative works thereof. Other than the Customer Data, all Vonage Content is as between Cus tomer and Vonage owned by Vonage.
Customer shall not (and shall not allow third parties to) (i) decipher, decompile, disassemble, reverse engineer, or otherwise attempt to derive any source code or underlying ideas or algorithms of Vonage Content, except to the limited extent applicable laws specifically prohibit such reverse- engineering restrictions; or (ii) alter, modify, translate, or otherwise create derivative works of any part of the Vonage Content, except as may be authorized by specific licensing terms accompanying certain Software.
E. Other Rights.
Except as explicitly granted herein, neither Party is granted a license or other right (express, implied, or otherwise) to use any trademarks, copyrights, service marks, logos, trade names, patents, trade secrets, or other intellectual property of the other Party or its Affiliates without the express prior written authorization of the other Party.
F. Restrictions.
The Services may contain Vonage Content provided by Vonage, Vonage’s partners and customers, or other third parties, that are subject to and protected by copyrights, trademarks, service marks, patents, trade secrets, or other proprietary rights and laws.
Customer shall abide by and maintain all copyright notices, information, and restrict ions contained in any Vonage Content accessed through the Services.
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9. CONFIDENTIALITY AND DATA PROTECTION
A. Confidential Information
“Confidential Information” means any non- public information or data, regardless of whether it is in tangible form, disclosed by either Party that is marked or otherwise designated as confidential or proprietary or that should otherwise be reasonably understood to be confidential given the nature of the information and the circumstances surrounding disclosure, including the material terms of this Agreement. The terms of the Agreement are the Confidential Information of both Parties. Neither Party may identify the other Party using its name, trademarks, and/or logos in marketing collateral, press releases, presentations, w ebsites, and/or case studies without the other Party’s written consent. Confidential Information does not include any information which: (i) is publicly available through no fault of receiving Party, (ii) was properly known to receiving Party, without restriction, prior to disclosure by the disclosing Party, (iii) was properly disclosed to receiving Party, without restriction, by another person without violation of disclosing Party’s rights, or (iv) is independently developed by the receiving Party without use of or reference to the disclosing Party’s Confidential Information.
B. Restrictions
Each Party agrees that it will use the Confidential Information of the other Party solely in accordance with the provisions of the Agreement (and for Vonage to provide the Services) and it will not disclose such Confidential Information to any third party without the other Party’s prior written consent, except as otherwise permitted hereunder or for Vonage to provide the Services or make other uses and disclosures identified in Vonage’s Privacy Policy. Each Party agrees to exercise due care in protecting the other Party’s Confidential Information from unauthorized use and disclosure. Each Party may also disclose the Confidential Information of the other Party to its e mployees, representatives, actual or potential investors, and subcontractors who have a need to know and are bound to keep such information confidential consistent with the terms of this section. In addition, Vonage may disclose the Agreement under a comparable non-disclosure agreement in response to a third- party due diligence request supporting a financing or non- ordinary course of business corporate transaction. Either Party may disclose the Confidential Information of the other as required by law, legal process, or court order; provided that, subject to applicable law, it promptly notifies the other Party of such required disclosure in order to allow the other Party to seek a protective order or other appropriate remedy.
C. Data Security
Vonage agrees to use commercially reasonable efforts to safeguard the security of Customer Data it handles, stores, processes, or transmits within its reasonable span of DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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control in accordance with applicable law. If Vonage discovers or i s notified of a breach of security relating to Customer Data, Vonage shall promptly (a) notify Customer of such breach; and (b) if the applicable Customer Data was within the reasonable span of control of Vonage at the time of such breach, Vonage shall: (i ) use commercially reasonable efforts to mitigate the effects of the breach; and (ii) take commercially reasonable steps to institute safeguards that are designed to prevent or attempt to prevent the recurrence of such breach.
D. Personal Data
Processing of personal data by Vonage on behalf of Customer shall be subject to the terms of the Vonage Data Processing Addendum (“DPA”), which is automatically incorporated into the Agreement by this reference.
10. WARRANTIES AND DISCLAIMERS.
A. Vonage Warranty
Vonage will provide the Services using a commercially reasonable level of skill and care, in material compliance with all applicable laws and otherwise subject to the terms of this Agreement. To the extent permitted by law, Vonage shall pass through to Customer any and all warranties Vonage receives in connection with equipment provided to Customer.
The Services will be provided substantially in accordance with the applicabl e Service Level Agreement. Customer’s exclusive remedy and Vonage’s entire liability for a breach of this Section are set forth in the applicable Service Level Agreement and Section 13 (Termination).
B. Customer Warranty
Customer and its Authorized Users’ use of the Services must at all times comply with all applicable laws and this Agreement.
C. Assumption of Risk
Vonage has no special relationship with or fiduciary duty to Customer. Notwithstanding anything to the contrary herein, Vonage shall have no liability for acts, faults, or omissions of any third party telecommunications systems, networks, or operators (including, without DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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limitation, suspension or termination of Vonage’s connections, or faults in or failures of such apparatus or network).
D. Disclaimer of Warranties
EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, SALES ORDER, OR
APPLICABLE SERVICE LEVEL AGREEMENT, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, THE SERVICES AND VONAGE CONTENT ARE PROVIDED “AS IS”, “AS AVAILABLE,” AND WITHOUT WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF TITLE, NON -INFRINGEMENT, MERCHANTABILITY, QUALITY (E.G., AS TO LATENCY AND THROUGHPUT), AND FITNESS FOR A PARTICULAR
PURPOSE, AND ANY WARRANTIES IMPLIED BY ANY COURSE OF PERFORMANCE OR USAGE OF TRADE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. VONAGE, AND VONAGE’S SUPPLIERS, PARTNERS, AND LICENSORS, AND EACH OF VONAGE’S AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AND
AGENTS, DO NOT WARRANT (AND HE REBY EXPRESSLY DISCLAIM ALL WARRANTIES) THAT: (I) THE SERVICES (OR ANY MOBILE OPERATORS) WILL BE
SECURE OR AVAILABLE AT ANY PARTICULAR TIME OR LOCATION, (II) ANY
DEFECTS OR ERRORS WILL BE CORRECTED, (III) THE CONTENT ON THE
VONAGE WEBSITES OR SERVICES (OR ANY THIRD PARTY SITES OR SERVICES
LINKED THERETO) IS ACCURATE, ERROR- FREE, OR COMPLETE, OR (IV) THE RESULTS OF USING THE SERVICES WILL MEET CUSTOMER’S REQUIREMENTS.
VONAGE DOES NOT WARRANT, ENDORSE, GUARANTEE, OR ASSUME
RESPONSIBILITY FOR ANY CONTENT OF, COMMUNICATION BY, OR PRODUCT OR
SERVICE ADVERTISED OR OFFERED BY, A THIRD PARTY THROUGH THE
SERVICES, AND VONAGE WILL NOT BE A PARTY TO OR IN ANY WAY BE
RESPONSIBLE FOR MONITORING ANY TRANSACTION BETWEEN CUSTOMER AND THIRD PARTIES. EXCEPT AS OTHERWISE AGREE D IN A BUSINESS
ASSOCIATE AGREEMENT SIGNED BY VONAGE, VONAGE MAKES NO
REPRESENTATION OR WARRANTY THAT THE SERVICES OR THEIR USE WILL
COMPLY WITH HIPAA OR WILL RENDER ANY PARTY COMPLIANT WITH HIPAA,
AND IS RELEASED FROM ANY LIABILITY FOR ITS ACTS OR OMISSIONS RELATING TO HIPAA.
11. INDEMNIFICATION
A. By Customer
Customer agrees to defend, indemnify, and hold harmless Vonage, its Affiliates, and each of their respective employees, licensors, contractors, directors, officers and representatives, from and against any damages, liabilities, claims, demands, obligations, DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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losses, fines, penalties, and expenses (including reasonable attorney’s fees) (collectively, “Losses”) incurred in connection with claims made or brought by a third party arising from or relating to: (i) use of the Services in a manner not authorized by this Agreement, including violations of the AUP or applicable law, by Customer, its Affiliates, or its or their Authorized Users, employees, agents, or subcontractors; (ii) claims relating to Customer Data; or (iii) gross negligence, fraud or willful misconduct of Customer, its Affiliates, or its or their employees, agents or subcontractors.
B. By Vonage
Vonage agrees to defend, indemnify and hold harmless Customer from and against any Losses incurred in connection with claims made or brought by a third party arising from or relating to (i) infringement of third-party Intellectual Property Rights due to Customer’s authorized use of the Services (other than Customer Data); or (ii) gross negligence, fraud or willful misconduct of Vonage or its employees, agents, or subcontractors.
Notwithstanding any of the foregoing, Vonage shall have no liability for Losses arising out of (x) any combination, operation, or use of the Services with any hardware, software, or services not provided by Vonage, except to the extent such combination, operation, or use is necessary for the use of the Services; or (y) use of any sample or reference code made available by Vonage or any third party, via the Vonage Website or otherwise.
C. Procedure
The indemnified Party shall notify indemnitor promptly after the indemnified Party learns of the existence of an indemnifiable claim hereunder; provided, however, that failure to give such notice shall only affect the rights of the indemnified Party to the extent that indemnitor is prejudiced. The indemnified Party shall not admit any liability whatsoever.
The indemnitor shall be entitled to take sole control of the defense and investigation of the indemnifiable claim at its own expense, by providing prompt written notice to the indemnified Party. The indemnified Party shall cooperate in all reasonable respects with the indemnitor and its attorneys in the defense of the claim (including by making available books, records, and personnel), and may reasonably p articipate at its own expense, through its attorneys or otherwise, provided that such participation does not interfere with the indemnitor’s defense. All settlements of indemnifiable claims under this Section shall:
(i) be entered into only with the indemnified Party’s consent if such settlement requires any admission of guilt or imposes any restriction or obligation on the indemnified Party; and (ii) include an appropriate confidentiality agreement prohibiting disclosure of the terms of such settlement.
12. LIMITATION OF LIABILITY
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A. Exclusions
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, IN NO EVENT SHALL EITHER PARTY OR VONAGE’S SUPPLIERS, LICENSORS, PARENT, SUBSIDIARY,
AFFILIATE, CONTENT PROVIDERS, OR ANY OF ITS OR THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS, BE LIABLE UNDER ANY
CONTRACT, TORT, WARRANTY, STRICT LIABILITY, NEGLIGENCE, OR ANY OTHER
LEGAL OR EQUITABLE THEORY WITH RESPECT TO THE SERVICES OR OTHER SUBJECT MATTER OF THIS AGREEMENT FOR: (I) ANY SPECIAL, INDIRECT,
INCIDENTAL, PUNITIVE, COMPENSATORY, OR CONSEQUENTIAL D AMAGES OF
ANY KIND WHATSOEVER, LOST PROFITS, GOODWILL, REVENUE, INCOME OR
BUSINESS, DATA LOSS, INTERRUPTION OF BUSINESS, OR COST OF
PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY, RIGHTS, OR SERVICES (HOWEVER ARISING AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES);
B. Direct Damages; Limitations
a. VONAGE'S AGGREGATE LIABILITY FOR ALL DAMAGES ARISING OUT OF OR
RELATED TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT, OR
OTHERWISE, SHALL IN NO EVENT EXCEED THE TOTAL AMOUNTS PAID OR ARE PAYABLE TO VONAGE UNDER THIS AGREEMENT IN THE TWELVE (12) MONTH
PERIOD IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO A CLAIM SUBJECT TO THIS SECTION. THE PARTIES ACKNOWLEDGE AND ACCEPT THE
REASONABLENESS OF THE DISCLAIMERS AND LIMITATIONS OF LIABILITY SET FORTH IN THIS SECTION.
b. NOTWITHSTANDING THE PROVISIONS IN THIS SECTION, NOTHING IN THIS
AGREEMENT SHALL LIMIT FINANCIAL LIABILITY IN RESPECT OF THE CUSTOMER’S PAYMENT OBLIGATIONS, EITHER PARTY’S INDEMNIFICATION OBLIGATIONS, OR EITHER PARTY’S LIABILITY FOR DEATH, BODILY I NJURY, OR
DAMAGE TO TANGIBLE PERSONAL PROPERTY, OR ANY OTHER ACT OR
OMISSION FOR WHICH LIABILITY SHALL NOT BE LIMITED UNDER APPLICABLE LAW.
13. TERM AND TERMINATION
A. Term
This Agreement shall be effective beginning on the Effective Date and continue for so long as Services are being provided to Customer.
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B. Termination
Either Party may terminate the Agreement for cause: (i) if the other Party is in material breach of the Agreement and has failed to cure such breach within thirty days after written notice thereof, or (ii) upon the other Party’s liquidation, commencement of dissolution proceedings, disposal of substantially all assets, failure to continue its business in the ordinary course, assignment for the benefit of creditors, or becoming the subj ect of a voluntary or involuntary bankruptcy or similar proceeding.
C. Effect of Termination and Survival
Upon termination of the Agreement, and without limiting any of Vonage’s other remedies hereunder: (i) Customer remains liable for all Charges and any other obligations accrued and owed by Customer through the effective date of such termination, and (ii) except in the case of termination owing to Vonage breach, Customer remains liable for all Charges and any other obligations accrued and owed by Custom er from the date of termination through the end of the contracted Service Term, and (iii) except as expressly set forth herein, all of Customer’s rights and licenses under the Agreement will immediately terminate and Customer shall cease using the Services. All amounts accrued or owed to Vonage in connection with the Agreement, and any other provisions which by their nature would reasonably survive, shall survive any termination of the Agreement. Following any suspension or termination of the Agreement or Customer’s Account other than for breach, Customer may request any post -termination assistance that Vonage may elect to make generally available with respect to the Services, subject to and conditioned upon Customer’s advance payment of any applicable fees and acceptance of all terms and conditions that Vonage specifies in writing with respect thereto.
14. NOTICES
a. Vonage shall send notices hereunder via email to the email address Customer provides in its Account. It is Customer’s responsibility to keep its email address current, and Customer will be deemed to have received any email sent to the last known email address Vonage has on record for Customer.
b. Customer shall send notices hereunder as follows:
i. Formal Legal Notices - via email to [email protected]. ii. Billing Disputes - via email to [email protected].
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iii. Cancellation/Non-Renewal of Services - by contacting Vonage Customer Care, or Customer’s account manager via email..
c. The addresses to which notices may be given by either Party may be changed upon written notice given to the other Party pursuant to this Section (Notices) or by Customer via the Customer portal.
15. EMERGENCY SERVICES
BY USING THE SERVICE AND/OR VONAGE EQUIPMENT, CUSTOMER
ACKNOWLEDGES THE LIMITATIONS OF VONAGE’S EMERGENCY SERVICE AS
DESCRIBED IN ITS EMERGENCY SERVICES POLICY, AS WELL AS THOSE SET FORTH IN THIS SECTION. CUSTOMER AGREES AND ACKNOWLEDGES THAT
WHILE MOST VONAGE SERVICES OFFER ACCESS TO APPLICABLE EMERGENCY SERVICES, OTHERS MAY NOT. CUSTOMER IS ADVISED TO THOROUGHLY READ
AND UNDERSTAND THE APPLI CABLE EMERGENCY SERVICES
ACKNOWLEDGEMENT AND THE OPTIONS AVAILABLE. CUSTOMER
ACKNOWLEDGES THAT IT ASSUMES THE RISKS ASSOCIATED WITH THE
EMERGENCY SERVICE LIMITATIONS AS SET FORTH IN THE EMERGENCY SERVICES DISCLOSURE NOTICE AND ACKNOWLEDGMENT.
16. GOVERNING LAW AND VENUE
This Agreement shall be governed by and construed in accordance with the laws of the country indicated on Schedule 2 based on Customer’s domicile, in any case without reference to conflicts of law rules, and jurisdiction and venue for all claims shall be held in accordance with Schedule 2. The United Nations Convention on Contracts for the International Sale of Goods shall be inapplicable hereto.
17. ARBITRATION AND DISPUTE RESOLUTION
A. Management Resolution
In the event either Party has a dispute or claim against the other Party, the disputing Party shall provide written notice to the other Party per Section 14 (Notices). The Parties agree to escalate disputes (other than invoice disputes) to their respective management, who will use commercially reasonable efforts to resolve the dispute by consulting with each other in good faith to reach an equitable resolution satisfactory to both parties within thirty days of the receipt of notice. Neither Party shall purs ue or commence proceedings DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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regarding the dispute in any court, administrative arbitral, or other adjudicative body prior to engaging in such consultations and negotiations.
B. Binding Arbitration
If negotiations fail to resolve the dispute within thirty days, and/or small claims court is not a valid option due to the size or nature of the claim, all disputed claims (except for claims relating to Intellectual Property Rights, indemnity, or confidentiality obligations, fraudulent or unauthorized use, theft, or piracy of service, or matters relating to injunctions or other equitable relief) must be resolved by binding arbitration before a single arbitrator, in the English language. This agreement to arbitrate is intended to be given the broadest possible meaning under applicable law. The initiation of an arbitration dispute shall not otherwise prevent Vonage or Customer from terminating Services in accordance with the Agreement.
C. Location and Procedure
A Party who intends to seek arbitration must first send to the other Party a written notice of dispute per Section 14 (Notices), which must describe the nature and basis of the dispute and set forth the specific relief sought. The arbitration location and arbitration organization will be according to the terms of Schedule 2, based on the principal business location of Customer. The amount of any settlement offer made by Customer or Vonage shall not be disclosed to the arbitrator until after the arbitrator determines the amount, if any, to which Customer or Vonage is entitled. Judgment on the award rendered by the arbitrator may be entered in any court having competent jurisdiction. Any provision of applicable law notwithstanding, the arbitrator will not have authority to award damages, remedies or awards that conflict with this Agreement. The prevailing Party in any action or proceeding to enforce this Agreement shall be entitled to recover its reasonable attorneys’ fees and costs.
D. Jury Trial and Class Action Waiver
Subject to applicable law, each Party waives its right to a trial by jury for claims subject to arbitration hereunder. The arbitrator may award relief only in favor of the individual Party seeking relief and only to the extent necessary to provide relief warranted by that Party's individual claim. The arbitrator may not award special, indirect, punitive, incidental or consequential damages. CUSTOMER MAY BRING CLAIMS AGAINST VONAGE ONLY IN CUSTOMER’S INDIVIDUAL CAPACITY AND NOT AS A CLAIMANT / PLAINTIFF,
CLASS MEMBER OR GROUP ACTION IN ANY PU RPORTED CLASS OR GROUP
ACTION OR REPRESENTATIVE PROCEEDING AND CUSTOMER EXPRESSLY DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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WAIVES ITS RIGHT TO BRING A CLASS OR GROUP ACTION SUIT. The arbitrator may not consolidate more than one person's or entity's claims and may not otherwise preside over any form of a representative or class proceeding.
E. Equitable Relief
Notwithstanding the foregoing, each Party shall be entitled to enforce its Intellectual Property Rights and seek equitable relief in any court of competent jurisdiction at any time.
18. MISCELLANEOUS
A. Entire Agreement; Headings
This Agreement constitutes the entire agreement between Customer and Vonage with respect to the Services, and supersedes all prior or contemporaneous communications and proposals (whether oral, written or electr onic) between the Parties with respect thereto. The section and paragraph headings in the Agreement are for convenience of reference only and shall not affect their interpretation. No oral or written information or advice given by Vonage or its employees and other representatives will create any obligations or warranty on behalf of Vonage unless otherwise agreed in a writing signed by an authorized Vonage representative. Any purchase orders, confirmations, payment documentation, or other terms provided by Customer, even if signed by the Parties after the date hereof, shall have no force or effect. In the event that the Parties have executed versions of the Agreement drafted in more than one language, the English language version shall govern and prevail. Cus tomer represents that Vonage has made no commitments or promises orally or in writing with respect to delivery of any future features or functions. In relation to any future features or functions, all presentations, RFP responses, and/or product roadmap documents, information or discussions are informational only and are not the basis for, nor part of this Agreement or any Sales Order.
B. Modifications and Waivers
Except as expressly provided elsewhere in the Agreement, the Agreement may not be changed or modified, nor may any provisions hereof be waived, nor may any consent or confirmation be considered to have been given, except by an agreement in writing signed by the Party against whom enforcement of the change or modification is asserted, and any such modification, change, waiver, consent, or confirmation on Vonage’s behalf may only be given by an authorized signatory of Vonage. The failure of either Party to exercise DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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in any respect any right provided for herein shall not be deemed a waiver of any ot her rights hereunder.
C. Severability
If any provision of the Agreement, or any part thereof, is found to be unenforceable or invalid, that provision will be (to the minimum extent necessary) replaced by a valid and enforceable provision the effect of which comes as close as possible to the intended economic effect of the unenforceable or invalid provision, so that the Agreement will otherwise remain in full force and effect.
D. Force Majeure
Neither Party is liable for any failure of performance (other than for delay or performance in the payment of money due and payable hereunder) to the extent such failure is due to any cause or causes beyond such Party’s reasonable control, including acts of God, fire, explosion, vandalism, adverse weather conditions, governmental action, acts of terrorism, strikes and similar labor difficulties, war, pandemic, sabotage, or denial of service attacks.
Neither Party’s invocation of this clause will relieve Customer of its obligation to pay for any Services actually provided or permit Customer to terminate an y Services except as expressly provided herein. The affected Party shall make all reasonable efforts to mitigate the effects of the force majeure event on the performance of its obligations under this Agreement.
E. Relationship of the Parties; No Third-Party Beneficiaries The relationship of the Parties shall not be that of partners, agents, or joint venturers for one another, and nothing contained in the Agreement shall be deemed to constitute a partnership or agency agreement between the Parties for any purpose. Vonage and Customer are independent contractors and shall discharge their contractual obligations at their own risk subject to the terms of the Agreement. Except as explicitly stated herein, nothing in the Agreement shall confer upon any third parties any rights, benefits, or remedies.
F. Assignment
This Agreement inures to and is binding upon the Parties’ successors and permitted assignees. Neither Party shall assign the Agreement without the other Party’s prior written DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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consent, not to be unreasonably conditioned, withheld or delayed; provided that such assigning Party may, without consent, but with reasonable prior written notice, assign its rights and obligations hereunder to any parent, affiliate, or subsidiary of such assigning Party o r pursuant to any merger, acquisition, reorganization, sale or transfer of all or substantially all its assets; provided, further, that with respect to an assignment by Customer, (i) the successor shall not provide services that compete with Vonage; (ii) the successor must be at least as creditworthy as Customer, as reasonably determined by Vonage; (iii) the successor shall agree in advance and in writing to assume and be bound by all provisions of the Agreement, and shall deliver to Vonage upon request ful ly- executed documents reasonably acceptable to Vonage establishing the terms of such an assignment; (iv) such assignment may not constitute or result in a violation of applicable trade control, export, or other law; and (v) Customer shall remain liable for all of Customer’s obligations that accrued prior to such assignment. Any assignment by a Party other than as permitted by this section shall be void and of no force or effect.
G. Trade Compliance
By using the Services, Customer represents and warrants that (i) its use of the Services will not violate any embargoes, sanctions, trade restrictions, or similar restrictions issued by any applicable governmental entity; and (ii) Customer, its Affiliates, and its Authorized Users have not been designated by any applicable government or any government agency as a prohibited or restricted party under any trade restrictions, export laws, or the like. Customer shall not use the Vonage Website or Services for any purpose prohibited by applicable law, including the development, design, manufacture, or production of missiles, or nuclear, chemical or biological weapons. Customer may not use, export, re- export, import, or transfer any technology or data related to the Services except as authorized by the Agreement and all applicable laws, rules, and regulations.
H. Government Terms
If Customer is an agency, department or other entity of any government, then any use, modification, duplication, reproduction, release, performance, display, transfer, or disclosure of the Services and accompanying documentation shall be governed solely by this Agreement. Any other use shall be prohibited and no other rights are granted.
I. Authority and Execution
Each Party represents that (i) it has full authority to enter into and per form under this Agreement; (ii) the person accepting the Sales Order(s) and any other applicable documents on its behalf is properly authorized; and (iii) it has read the Agreement, DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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understands it, and agrees to be bound by all of its terms, conditions, and provisions. This Agreement shall become effective upon Acceptance of a Sales Order. Electronic Acceptance of Sales Orders and any other applicable documents, and the incorporation by reference of this Agreement into all applicable documents shall be deem ed valid, binding and enforceable by and against both Parties.
J. Basis of Bargain; Failure of Essential Purpose
Customer acknowledges and agrees that Vonage has established its prices and entered into this Agreement in reliance upon the limitations a nd exclusions of liability and the warranty disclaimers set forth in this Agreement, and that they are an essential basis of the bargain between the parties and are material terms of this Agreement. The Parties agree that the limitations and exclusions of liability and warranty disclaimers specified in this Agreement will survive and apply even if found to have failed their essential purpose, and Customer hereby waives its right to contest the enforceability of any provision of this Agreement by reason of such failure.
K. Export Compliance
The Services and any derivatives thereof may be subject to export laws and regulations of the United States and other jurisdictions. Each party represents that it is not named on the United States’ government denied- party list . Additionally, the Customer shall not permit its Authorized Users to access or use the Services while located in a United States embargoed country (currently Cuba, Iran, North Korea, Sudan, Syria or Crimea) or in violation of any United States’ export law or regulation.
L. Order of Precedence
In the event of any conflict or inconsistency among the following documents, the order of precedence shall be: (a) the DPA and BAA (if applicable); (b) the Sales Order; (c) Product- Specific Terms (where relevant); (d) the Service Descriptions and Service Level Agreement (if applicable); (e) this Agreement; (f) the Statement of Work (if applicable).
M. Choice of Language
Each Party hereby confirms its express wish that this Agreement and all related documents be prepared in the English language only.
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N. Survival
Survival. The terms and conditions of this Agreement will survive the expiration or other termination of this Agreement to the fullest extent necessary for their enforcement and for the realization of the benefit thereof by the Party in whose favor they operate.
SCHEDULE 1
Definitions
“Acceptance” of an Sales Order (or “Accepts” or “Accepted”) shall mean (a) with respect to the Customer: (i) clicking a box indicating acceptance; (ii) executing a Sales Order, amendment or Change Order, (ii i) using Vonage’s online portal to order Services; (iv) conveying Sales Ordering instructions to Vonage followed by implementation of such Sales Order instructions; (v) using free or N/C Services; and (b) as to Vonage, the written or electronic confirmation of its acceptance of an Sales Order. “Account” means the numbered account established with Vonage and associated with Customer and the Services provided to Customer under this Agreement. “Affiliate” means any entity that directly or indirectly controls, is controlled by, or is under common control with the subject entity. “Control,” for purposes of this definition, means direct or indirect ownership or control of more than 50% of the voting interests of the subject entity.
“Agreement” means a Sales Order, this Agreement, and all applicable documents incorporated by reference and/or mutually Accepted by the Parties, which shall collectively form a legally binding agreement.
“AUP” means the Acceptable Use Policy accessible here.
“Authorized User” means the authorized individual accepting this Agreement on behalf of Customer, and to whom Vonage has supplied a user identification and password.
Authorized Users may include, for example, employees, consultants, contractors and DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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agents of Customer and its Affiliates, and third parties with which Customer authorizes to access Customer’s Account and use the Services.
“Change Order” means any mutually agreed change to a SOW affected by a Change Order form, signed by the Customer and Vonage detailing the relevant change. “Charges” or “Subscription Charges” means the charges and fees payable under this Agreement.
“Customer” means the customer identified in the Sales Order. “Customer Data” means all data, information or material submitted by the Customer or the persons to whom the Customer Data relates, or Authorized Users to the Subscription Services, in connection with Customer’s use of the Services. “Customer Equipment ” means any equipment, software, software data storage, systems, cabling or facilities provided by the Customer and used directly or indirectly with the Services.
“Customer Location” means the physical location(s) where the Services are provided. “Effective Date” means the date of acceptance or execution of the applicable Sales Order.
“Initial Term” means the initial term of the Subscription Services as stated on a Sales Order.
“Intellectual Property Rights ” means all patents, rights to inventions, utility models, copyright and related rights, trademarks, service marks, trade, business and domain names, rights in trade dress or get -up, rights in goodwill or to sue for passing off, unfair competition rights, rights in designs, rights in computer software, database right, topography rights, moral rights, rights in confidential information (including know-how and trade secrets) and any other intellectual property rights, in each case whether registered or unregistered and including all applications for and renewals or extensions of such rights, and all similar or equivalent rights or forms of protection in any part of the world. “Marketplace” means an online exchange, catalogue or mark etplace of applications, sponsored or operated by Vonage, that interoperate with the Services. “Other Data” means information obtained by Vonage from publicly available sources or its third-party content providers and made available to Customer through the Services, Beta Services or pursuant to a Sales Order.
“Payment Terms” means the period of time Customer is required to remit payment for an invoice in full, without deduction or set-off, as stated in the Sales Order.
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“Professional Services” means the set -up, installation, configuration and other professional services identified in a Sales Order (and more fully described in an applicable SOW) that are to be provided by Vonage in connection with the Subscription Services. “Professional Service Fees” means the fees for the Professional Services as set out in the Sales Order.
“Renewal Term” means the period immediately following expiration of the Initial Term which is the same duration as the Initial Term except as otherwise set forth in the Sales Order or amendment.
“Sales Order” means the Vonage Services ordering document, electronic or paper format, (together with any schedules), accepted by Customer and Vonage detailing the specific products and Services purchased by the Customer. By entering into a Sales Order Customer agrees to be bound by the terms of this Agreement. “Service Description ” means individually or collectively the documentation that describes the Subscription Services.
“Services” or “Subscription Services” means all products, software and ser vices provided under this Agreement (including Vonage Equipment) that are ordered by Customer, which are provided on a recurring or subscription basis, and for which the Customer pays one or more Charges, and that are provided by Vonage as detailed on the Sales Order. Services exclude non-Vonage products and services and Other Data. “Shipping and Handling” means any fees and costs payable by Customer to Vonage in connection with packaging, shipping, or processing Vonage Equipment or purchased equipment to a Customer Service location.
"Software" means proprietary software (including documentation relating to such software) owned or licensed by Vonage, or which Vonage has a right to sublicense under this Agreement, which software is either provided to Custom er under this Agreement or is used by Customer in connection with the Services.
“Statement of Work” or “SOW” means the document signed by Parties which describes the Professional Services to be provided.
“Subscription Services Invoicing Frequency” means the intervals at which Vonage will deliver its invoices for Subscription Charges as detailed on the Sales Order. “Subscription Term” means the term of the Subscription Services and shall include the Initial Term together with any Renewal Term. The term of Subscription Services shall be as specified in the applicable Sales Order.
“Subscription Service Term Start Date” means the date that the Account is created, Customer has platform access, the subscription licenses are first made available DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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(activated), and the Subscription Term and payment obligation for the Subscription Services commences.
“Taxes and Fees” means those country, province, federal, state, or local taxes, including without limitation, use, sales, value- added, privilege, or other taxes, levies, im ports, duties, fees, surcharges, governmental assessments, and withholdings assessed against Customer or the Subscription Services, equipment purchases and Professional Services.
Taxes and Fees do not include Vonage fees, recovery fees and surcharges that may be imposed on specific Services, and which are described in the applicable Sales Order and/or Invoice.
“Usage Charges” means the variable, usage- based charges payable by the Customer for connected minutes of telephony not falling within a relevant bund le of pre-purchased connected minutes of telephony or other monthly recurring charges for Services including minutes of telephony, or for SMS texts (if any) at the rates set out in the applicable Service Description or as otherwise defined in the Agreement.
“Vonage” means the Vonage business entity identified on the Sales Order. “Vonage Content” means all content made available by Vonage through the Vonage Website or the Services.
“Vonage Business Communications Services” or “VBC Services” means the telephony, conferencing, messaging and related Subscription-based services. “Vonage Contact Center Services or VCC Services” means the contact center services provided by Vonage.
“Vonage Equipment” means all equipment that is used, leased or otherwise provided by Vonage to Customer for use in connection with the Services, including phone hardware (e.g., phones, routers, switches, SD -Wan devices, and battery backup). Vonage Equipment does not include Customer Equipment or Third-Party Equipment. “Vonage Website” means the website set forth at https://www.vonage.com/ and/or other localized Vonage website as may be available or applicable in certain countries, through which Vonage’s products and services are described, as well as the online administrative portal through which Customer manages the Account and/or can make additional purchases for the Account.
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SCHEDULE 2
Vonage Contracting Entities, Governing Law, Venue
Customer
Domicile
d In
Supplier Contacting Entity Address For
Notices
Governin
g Law
Courts
Having
Exclusive
Jurisdiction
Arbitration
Association
and Place of
Arbitration
Europe,
Middle
East or
Africa
Vonage Business Limited,
a company registered in
England and Wales.
Registered Number:
3602868
Legal Department,
Vonage Business
Limited
Rosalind House,
Jays Close,
Basingstoke,
Hampshire, RG22
4BS, UK
England England
London
Court of
Internationa
l Arbitration
(LCIA)
having its
seat of
arbitration
in London
North
America
or South
America
Vonage Business Inc.,
a company registered in
the
United States of America.
Registered Number:
4437638
Legal Department,
23 Main Street,
Holmdel, NJ
07733
Email: LegalNotic
[email protected]
Delaware Delaware
American
Arbitration
Association
The Asia
Pacific
Region
Vonage Australia Pty Ltd,
a company registered in
Australia.
Registered Number:
153693326
Legal Department,
Level 12680,
George Street,
Sydney, NSW
2000, Australia
New
South
Wales,
Australia
New South
Wales,
Australia
The
Institute of
Arbitrators
&
Mediators
Australia
having its
seat in
Sydney
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SCHEDULE 3
Country-Specific Terms
The following additional terms and conditions (“Country -Specific Terms”) shall apply if and to the extent the Customer is domiciled under the laws of one of the countries listed below. In the event of a conflict between the Country -Specific Terms and the other provisions of the Agreement, the Country-Specific Terms shall prevail.
Australia
Except to the extent permitted by law, nothing in this Agreement has the effect of excluding, restricting or modifying:
1. The application of any Consumer Guarantee that applies to the supply of the Services (“Consumer Guarantees” means, if applicable to the Parties, the consumer guarantees in Division 1 of Part 3-2 of the Australian Consumer Law);
2. The exercise of a right under any Consumer Guarantee that applies to the supply of the Services; or
3. Any liability of Vonage for a failure to comply with a Consumer Guarantee that applies to the supply of the Services.
4. To the extent permitted by law, Vonage’s liability for breach of any Consumer Guarantee is limited,
at the Vonage’s option to:
i. the re-supply of the Services that breached the Consumer Guarantee; or ii. the payment of the cost of having those Services supplied again.
Belgium
Customer may terminate a Sales Order for convenience at any time, provided that (a) if Customer terminates the Sales Order for convenience prior to the end of the sixth month of the Subscription Service Term, it shall be liable to Vonage for all Charges that would have been due under the applicable Sales Order through the end of the sixth month of the Subscription Service Term; and (b) Customer shall not be liable for any early DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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termination charges if it terminates the Sales Order for convenience on or after the end of the sixth month of the Subscription Service Term.
Canada
Each Party hereby confirms its express wi sh that this Agreement and all related documents be prepared in the English language only. Les parties reconnaissent avoir exigé que le présente convention et tous les documents connexes soient rédigés en anglais seulement.
European Union
The following terms (“EU Terms”) shall apply to the extent the Customer is organized under the laws of a Member State of the European Union.
1. Changes to the Agreement. A unilateral change to the Agreement by Vonage shall be effective thirty days after Vona ge provides notice to Customer. If Customer reasonably objects to such change and such change is not to the exclusive benefit of Customer, it may terminate the Agreement by providing notice of termination to Vonage no later than thirty days following Vonage’s notification of the change to Customer.
2. Use of Customer Data. Customer shall ensure that Vonage is enabled to use all Customer Data (including content) necessary to provide the Services).
3. Primary Characteristics of Services. The primary characteristics of the Services will remain available to the Customer during the Subscription Service Term of the Agreement.
4. Waiver of Certain Provisions of the European Electronic Communications Code. If Customer is a microenterprise, small enterprise, or not-for-profit organization (as defined under European Union law), it hereby explicitly waives the applicability of sections 102, 105, and 107 of Directive 2018/1972 of the European Parliament and of the Council of December 11, 2018 establishing the European Electronic Communications Code (“EECC”), and any Member State law or regulation implementing these EECC provisions.
Germany
Customer may dispute an invoice by providing written notice within eight weeks after receipt. Handling of the dispute shall be in accordance with the German Telecommunications Act.
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Sweden
1. Limits on Usage Charges. Customer may at any time during the Term, free of charge, request the Services be suspended when call and other charges have reached an amount specified by Customer. The specified amount may be amended by Customer without additional charges.
2. Blocking High-Cost Calls. Customer may at any time during the Term, free of charge, request that numbers with elevated calling fees be blocked.
The Netherlands
No limitations on liability shall apply to losses arising from Vonage’s deliberate recklessness or intentional misconduct.
United Kingdom
1. Waiver of Certain Provisions of the European Electronic Communications Code.
If Customer is a microenterprise, small enterprise, or not-for-profit organization (as defined under European Union law), it hereby explicitly waives the applicability of sections 102, 105, and 107 of Directive 2018/1972 of the European Parliament and of the Council of December 11, 2018 establishing the European Electronic Communications Code (“EECC”), and any Member State law or regulation or the UK General Conditions of Entitlement (GCs) implementing these EECC provisions.
2. Emergency Services.
2.1 For Customers accessing the Telephony Services via a VBC-UK Plan; where such service is fully operational, 999/112 public emergency call services can be accessed from within England, Wales, Scotland and Northern Ireland. However, the Customer understands and acknowledges that Users may experience some service limitations as follows:
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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2.1.1 If using the Telephony Services outside England, Wales, Scotland and Northern Ireland a User will not be able to call emergency services for the country in which the User is located. The Customer is responsible for ensuring that a line from another communications provider is set up to call emergency services within the relevant country.
2.1.2 If there is a Telephony Service outage for any reason, such outage may prevent access to 999/112 dialing.
2.1.3 The Customer must register with the Supplier the primary physical location where it will be using the Telephony Service. The Customer’s main location will be registered as a part of receiving the Telephony Service. It is the Customer’s responsibility to maintain the accuracy of its location address if there are any changes. The Customer can do this by telephoning the Supplier’s support team on 0800 316 1317 or +44 207 760 8888. If the Customer fails to update the Supplier with changes, it may or may not be possible for emergency operators and authorities to identify the User’s location and phone number when he/she dials 999/112. Location information of the Customer’s main office (as notified) will only be provided to emergency services; extension information may not be provided to emergency services. When dialing 999/112, the User will need to state his/her location and phone number promptly and clearly, as emergency operators and authorities may not have this information.
2.1.4 Emergency operators and authorities may or may not be able to identify the User’s phone number in order to call the User back if the call is unable to be completed, is dropped or disconnected, or if the User is unable to speak to state his/her phone number and/or if the Telephony Service is not operational for any reason. Emergency operators and authorities may also not be able to hold the line open in the event that the User hangs up.
2.1.5 The Customer agrees to inform Users and potential users of the Telephony Service of the above limitations and understands and accepts that it should always have an alternative means of accessing 999/112 emergency services.
2.1.6 If the Supplier has cause to suspend the Telephony Service, a User will still be able to dial 999.
2.2 Outbound dialling to emergency services is not available if the Telephony Services are accessed via the Vonage Contact Centre contact-pad (which is the interface used by Authorized Users providing voice capabilities, features and functions).
2.2 Outbound dialing to emergency services is not available if the Telephony Services are accessed via the Vonage Contact Centre contact-pad (which is the interface used by Authorized Users providing voice capabilities, features and functions).
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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3. Number Porting.
3.1 Although unlikely, number portability (which is the process for moving Customer’s telephone number from one communications provider to another) may not be possible. If the Customer wishes to port its telephone number to the Supplier or its telephone number from the Supplier to another provider, the Supplier cannot guarantee that the Customer will be able to retain its telephone number.
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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ADDENDUM TO VONAGE BUSINESS SERVICE TERMS
Sales Order #(s): 626491,626490, 626489
This Addendum is executed by and between Vonage Business Inc. ("Vonage Business") and the customer identified in the signature block below ("Customer") in connection with the above-referenced Sales Order ("Sales Order"). This Addendum supplements or amends the terms and conditions set forth at https://www.vonage.com/legal/unified- communications/tos/global-vbc-tos/ (the "Service Terms"), which are referenced in and made part of the Sales Order. To the extent of any inconsistency between this Addendum and the Service Terms, this Addendum wi ll control. Except as amended or supplemented by this Addendum, the Service Terms otherwise remain unchanged and in full force and effect. Defined terms in this Addendum have the same meaning given such terms in the Service Terms.
Notwithstanding anything to the contrary in the Service Terms, the Parties hereby agree as follows:
1. PRICING
Customer will pay Vonage Business up to $244,413 for Products and Services over the 36-month Service Term. All quoted prices in the above-referenced Sales Order may not include Taxes and Fees.
The authorized representatives of Vonage Business and Customer have executed this Addendum below:
Vonage Business Inc. The City of Lake Forest
By:
Name:
Title:
By:
Name:
Title:
Date: Date:
DocuSign Envelope ID: ADD3B598-D44A-43F8-B7D9-9C5E693A35CF Best Best, & Krieger LLP, City Attorney
Robert Pequeño
Mayor
12/8/2022
Vincent DePasquale
Sr. Director of Customer Success
Dec 30, 2022
Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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ADDENDUM TO VONAGE BUSINESS SERVICE TERMS
Sales Orders # 559833 & 559855
This Addendum is executed by and between Vonage Business Inc. ("Vonage Business") and the customer identified in the signature block below ("Customer") in connection with the above-referenced Sales Orders ("Sales Orders"). This Addendum supplements or amends the terms and conditions set forth in the Master Services Agreement between Vonage Business and Customer dated May 21, 2019 (the "Service Terms"), which are referenced in and made part of the Sales Orders. To the extent of any inconsistency between this Addendum and the Service Terms, this Addendum will control. Except as amended or supplemented by this Addendum, the Service Terms otherwise remain unchanged and in full force and effect. Defined terms in this Addendum have the same meaning given such terms in the Service Terms.
Notwithstanding anything to the contrary in the Service Terms, the Parties hereby agree as follows:
1. EXHIBIT V-B, PRODUCTS AND PRICING.
The language contained in the Exhibit V-B, Products and Pricing, Section 3 of the Service Terms is hereby deleted in its entirety and replaced with the following language:
“City will pay Vonage Business up to $242,881.00 for products and services over the 36-month period of the Agreement.”
All other Service Terms remain unchanged and in full force and effect.
The authorized representatives of Vonage Business and Customer have executed this Addendum below:
Vonage Business Inc. City of Lake Forest
By:
Name:
Title:
By:
Name:
Title:
Date: Date:
DocuSign Envelope ID: 746B7F54-5C71-4C09-A75F-CA5D943C6310 Best Best, & Krieger LLP, City Attorney
Mayor
Robert Pequeño
12/8/2022
Vincent DePasquale
Sr. Director of Customer Success
Dec 30, 2022
Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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City of Lake Forest - Renewal
Final Audit Report 2022-12-30
Created: 2022-12-30
By: Sabrina Susuras ([email protected])
Status: Signed
Transaction ID: CBJCHBCAABAAqZ48JXgVgEt_TxbaYRkcM8jiYyiyF6P_ "City of Lake Forest - Renewal" History
Document digitally presigned by DocuSign\, Inc. ([email protected]) 2022-12-29 - 5:10:11 PM GMT- IP address: 72.216.149.29
Document digitally presigned by DocuSign\, Inc. ([email protected]) 2022-12-29 - 5:10:52 PM GMT- IP address: 72.216.149.29
Document created by Sabrina Susuras ([email protected]) 2022-12-30 - 4:14:55 PM GMT- IP address: 72.216.149.29
Document emailed to [email protected] for signature 2022-12-30 - 4:25:56 PM GMT
Email viewed by [email protected]
2022-12-30 - 4:29:00 PM GMT- IP address: 66.102.8.115
Signer [email protected] entered name at signing as Vincent DePasquale 2022-12-30 - 4:30:21 PM GMT- IP address: 148.74.109.23
Document e-signed by Vincent DePasquale ([email protected]) Signature Date: 2022-12-30 - 4:30:23 PM GMT - Time Source: server- IP address: 148.74.109.23 Agreement completed.
2022-12-30 - 4:30:23 PM GMT
Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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ADDENDUM TO VONAGE BUSINESS SERVICE TERMSSales Order #(s): 626491,626490, 626489, 662947This Addendum is executed by and between Vonage Business Inc. ("Vonage Business") and the customer identified in the signature block below ("Customer") in connection with the above-referencedSales Order ("Sales Order"). This Addendum supplements or amends the terms and conditions set forth at https://www.vonage.com/legal/unified-communications/tos/global-vbc-tos/(the "Service Terms"), which are referenced in and made part of the Sales Order. To the extent of any inconsistency between this Addendum and the Service Terms, this Addendum will control. Except as amended orsupplemented by this Addendum, the Service Terms otherwise remain unchanged and in full force and effect. Defined terms in this Addendum have the same meaning given such terms in the Service Terms.Notwithstanding anything to the contrary in the Service Terms, the Parties hereby agree as follows:1. PRICINGCustomer will pay Vonage Business up to $252,000 for Products and Services over the 36-month Service Term. All quoted prices in the above-referenced Sales Order may not include Taxes and Fees.The authorized representatives of Vonage Business and Customer have executed this Addendum below:Vonage Business Inc. The City of Lake ForestBy: By:Name: Name:Title: Title:Date: Date:
Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Item: 8
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2nd ADDENDUM TO VONAGE BUSINESS SERVICE TERMS
Sales Orders # 626489, 626490 and 626491
This Addendum is executed by and between Vonage Business Inc. ("Vonage Business") and the customer identified in the signature block below ("Customer") in connection with the above - referenced Sales Order ("Sales Order"). This Addendum supplements or amend s the terms and conditions set forth at https://www.vonage.com/legal/unified-communications/enterprise/tos/ (the "Service Terms"), which are referenced in and made part of the Sales Order. To the extent of any inconsistency between this Addendum and the Service Terms, this Addendum will control. Except as amended or supplemented by this Addendum, the Service Te rms otherwise remain unchanged and in full force and effect. Defined terms in this Addendum have the same meaning given such terms in the Service Terms.
Notwithstanding anything to the contrary in the Service Terms, the Parties hereby agree as follows:
1. MONTHLY CHARGES UNDER SALES ORDERS
The Parties agree and confirm that the total monthly charges for the Services under Sales Order numbers 62648 (Civic Center), 626490 (Skate Park) and 626491(Sports Park) is $7167.50 not including Taxes and Fees as set out in the table below:
Location: Civic Center
Name Quantity Rate Total
AudioConnect Audio Conferencing - Flat Rate 1 20 20
Hunt Group 22 4 88
Long Distance Outbound (2.5) and Inbound Toll Free
(2.5) service 1 0 0
Managed Ethernet Loop 5 Mbps 1 500 500
Managed Router Rental - Ethernet up to 50 mb 1 15 15
Polycom 6000 Rental 11 18 198
Polycom CCX 500 & Handset no Power Supply -
Rental 11 9 99
Polycom VVX 250 POE - Rental 6 3 18
Polycom VVX Color Expansion Module Rental 8 6 48
Polycom VVX201 POE Rental 42 3 126
Polycom VVX601 POE Rental 115 9 1035
Premier Basic 51 13 663
Premier Plus 134 25 3350
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Premier Plus 6 29 174
SmartWAN Mono-30 Mbps-Rental 1 71 71
Auto Attendant 10 5 50
DID Single Number 2 0.25 0.5
Equipment Shipping/Handling - Ground 2 0 0
Group Page 10 1 8 8
Managed Analog Port 10 8 80
Phone Shipping and Handling - 2 Day 1 0 0
Phone Shipping and Handling - Ground 7 0 0
Unified Mailbox 22 5 110
Total: $6,653.50
Location: Skate Park
Name Quantity Rate Total
Long Distance Outbound (2.5) and Inbound Toll Free
(2.5) service 1 $0.00 $0.00
Polycom VVX601 POE Rental 3 $9.00 $27.00
Premier Plus 6 $25.00 $150.00
Unified Mailbox 1 $5.00 $5.00
Total: $182.00
Location: Sports Park
Name Quantity Rate Total
Hunt Group 1 $4.00 $4.00
Long Distance Outbound (2.5) and Inbound Toll Free
(2.5) service 1 $0.00 $0.00
Polycom VVX201 POE Rental 12 $3.00 $36.00
Polycom VVX601 POE Rental 4 $9.00 $36.00
Premier Basic 12 $13.00 $156.00
Premier Plus 4 $25.00 $100.00
Total: $332.00
2. PRICING
Customer will pay Vonage Business up to $268,850 for the Products and Services over the 36-month Service Term. All quoted prices in the above referenced Sales Order do not include Taxes and Fees.
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The authorized representatives of Vonage Business and Customer have executed this Addendum below:
Vonage Business Inc. City of Lake Forest
By:
Name:
Title:
By:
Name:
Title:
Date: Date:
Docusign Envelope ID: BF7B6211-D34D-4AE9-8354-981607E303F3 Approved as to Form:
Best Best & Krieger LLP, City Attorney
5/22/2025
City Manager
Debra Rose
5/27/2025
Sr. Director Customer Success
Vincent DePasquale
Attest:
Thy Merritt, Acting City Clerk
Item: 8
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ATTACHMENT 4
Item: 8
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3rdADDENDUM TO VONAGE BUSINESS SERVICE TERMSSales Orders # 626489, 626490 and 626491This Addendum is executed by and between Vonage Business Inc. ("Vonage Business") and the customer identified in the signature block below ("Customer") in connection with the above-referenced Sales Order ("Sales Order"). This Addendum supplements or amends the terms and conditions set forth at https://www.vonage.com/legal/unified-communications/enterprise/tos/(the "Service Terms"), which are referenced in and made part of the Sales Order. To the extent of any inconsistency between this Addendum and the Service Terms, this Addendum will control. Except as amended or supplemented by this Addendum, the Service Terms otherwise remain unchanged and in full force and effect. Defined terms in this Addendum have the same meaning given such terms in the Service Terms. Notwithstanding anything to the contrary in the Service Terms, the Parties hereby agree as follows:1. MONTHLY CHARGES UNDER SALES ORDERSThe Parties agree and confirm that the total monthly charges for the Services under Sales Order numbers 62648 (Civic Center), 626490 (Skate Park) and 626491(Sports Park) is$7167.50 not including Taxes and Fees as set out in the table below: Location: Civic CenterName Quantity Rate TotalAudioConnect Audio Conferencing - Flat Rate 1 20 20Hunt Group 22 4 88Long Distance Outbound (2.5) and Inbound Toll Free (2.5) service 1 0 0Managed Ethernet Loop 5 Mbps 1 500 500Managed Router Rental - Ethernet up to 50 mb 1 15 15Polycom 6000 Rental 11 18 198Polycom CCX 500 & Handset no Power Supply -Rental 11 9 99Polycom VVX 250 POE - Rental 6 3 18Polycom VVX Color Expansion Module Rental 8 6 48Polycom VVX201 POE Rental 42 3 126Polycom VVX601 POE Rental 115 9 1035Premier Basic 51 13 663Premier Plus 134 25 3350 Item: 8
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Premier Plus 6 29 174SmartWAN Mono-30 Mbps-Rental 1 71 71Auto Attendant 10 5 50DID Single Number 2 0.25 0.5Equipment Shipping/Handling - Ground 2 0 0Group Page 10 1 8 8Managed Analog Port 10 8 80Phone Shipping and Handling - 2 Day 1 0 0Phone Shipping and Handling - Ground 7 0 0Unified Mailbox 22 5 110Total:$6,653.50Location: Skate ParkName Quantity Rate TotalLong Distance Outbound (2.5) and Inbound Toll Free (2.5) service1 $0.00 $0.00Polycom VVX601 POE Rental3 $9.00 $27.00Premier Plus6 $25.00 $150.00Unified Mailbox1 $5.00 $5.00Total:$182.00Location: Sports ParkName Quantity Rate TotalHunt Group1 $4.00 $4.00Long Distance Outbound (2.5) and Inbound Toll Free (2.5) service1 $0.00 $0.00Polycom VVX201 POE Rental12 $3.00 $36.00Polycom VVX601 POE Rental4 $9.00 $36.00Premier Basic12 $13.00 $156.00Premier Plus4 $25.00 $100.00Total:$332.002. PRICINGCustomer will pay Vonage Businessfor the Products and Services over the 36-month Service Term. All quoted prices in the above referenced Sales Order do not include Taxes and Fees.
Item: 8
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The authorized representatives of Vonage Business and Customer have executed this Addendum below:Vonage Business Inc. City of Lake ForestBy: Name: Title: By: Name: Title: Date: Date:
Item: 8
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ATTACHMENT 5
Item: 8
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Sales Order
Sales Order #: Q-1807415
Customer: City of Lake Forest
Customer Contact: Joanne Jin
Sales Order Valid for Customer Signature Until: Dec 31, 2025 at 11:59 pm (EST) Subscription Services Initial Term: 3 Year
Subscription Service Term Start Date: 60 Days After Sales Order Acceptance Subscription Services Invoicing Frequency: Monthly
Payment Terms: Due on receipt
Sales Order Currency: USD
Quote #Q-1807415
Account Executive
Sabrina Susuras
[email protected]
(480) 445-9313
Contact your Account Executive with any
questions
Included at no extra cost:
The "Vonage Business Cloud" Mobile app! Call and text using your personal business number on-the-go, check voicemails, access paid add-ons and more.
Available on the App Store and Google Play. Mobile data charges may apply.
Name Address One time
set up price Estimated monthly price
Civic Center Primary 100 Civic Center Drive
Lake Forest, CA
92630 US
$ 3,947.93 $ 7,195.00
Civic Center
100 Civic Center Drive, Lake Forest, CA 92630 US
Purchase order:
One time set up price
Product Quantity Unit price Subtotal
Location Activation ^^ 1 $ 400.00 $ 400.00
($ 300.00)Location Activation Discount
PS - SmartWan Deployment 1 $ 300.00 $ 300.00
Product total $ 698.00
Shipping
Standard Shipping 165 $ 15.00 $ 2,475.00
Subtotal (excludes taxes) $ 3,173.00
Taxes
County - Sales Tax $ 124.99
State - Sales Tax $ 599.94
County - District Tax $ 50.00
Item: 8
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Monthly charge (upon activation)
Skate Park
20028 LAKE FOREST
DR
Lake Forest, CA
92630 US
$ 145.00 $ 104.85
Taxes total $ 774.93
Total one time set up price $ 3,947.93
Product Quantity Unit price Subtotal
Unlimited Extension ^^ 195 $ 17.99 $ 3,508.05
Local Company Number ^^ 1 $ 4.99 $ 4.99
Call Group 22 $ 4.99 $ 109.78
Hold Number ^^ 2 $ 0.25 $ 0.50
Paging Group ^^ 1 $ 2.50 $ 2.50
Yealink SIP-T46U with Power Supply - Rental ^^ 157 $ 3.99 $ 626.43 Yealink CP925 Conf Phone w/ POE Adaptor - Rental ^^ 4 $ 15.98 $ 63.92 Virtual Mailbox ^^ 18 $ 3.49 $ 62.82
SmartWAN+ Access and HA-30 Mbps-Rental ^^ 1 $ 1,035.00 $ 1,035.00 Fees
Recovery Fee $ 686.00
Emergency Services Fee $ 193.05
Subtotal $ 6,293.04
Taxes
County - Sales Tax $ 26.70
State - Sales Tax $ 128.16
State - E911 (VoIP) $ 79.95
Federal - Federal Program Fee $ 465.37
State - E-988 (VoIP) $ 15.60
County - District Tax $ 10.68
State - CA Public Purpose Program Surcharge (VoIP) $ 175.50 Taxes total $ 901.96
Estimated monthly price $ 7,195.00
Item: 8
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Skate Park
20028 LAKE FOREST DR, Lake Forest, CA 92630 US
Purchase order:
One time set up price
Monthly charge (upon activation)
Product Quantity Unit price Subtotal
Location Activation 1 $ 100.00 $ 100.00
Product total $ 100.00
Shipping
Standard Shipping 3 $ 15.00 $ 45.00
Subtotal (excludes taxes) $ 145.00
County - Sales Tax $ 0.00
State - Sales Tax $ 0.00
County - District Tax $ 0.00
Total one time set up price $ 145.00
Product Quantity Unit price Subtotal
Unlimited Extension ^^ 3 $ 17.99 $ 53.97
Local Company Number ^^ 1 $ 4.99 $ 4.99
Yealink SIP-T46U with Power Supply - Rental ^^ 3 $ 3.99 $ 11.97 Virtual Mailbox ^^ 1 $ 3.49 $ 3.49
Fees
Recovery Fee $ 14.00
Emergency Services Fee $ 2.97
Subtotal $ 91.39
Taxes
County - Sales Tax $ 0.23
State - Sales Tax $ 1.10
State - E911 (VoIP) $ 1.23
Federal - Federal Program Fee $ 7.87
State - E-988 (VoIP) $ 0.24
County - District Tax $ 0.09
State - CA Public Purpose Program Surcharge (VoIP) $ 2.70 Taxes total $ 13.46
Item: 8
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Sports Park
28000 RANCHO PKWY
Lake Forest, CA
92630 US
$ 190.00 $ 484.10
Sports Park
28000 RANCHO PKWY, Lake Forest, CA 92630 US
Purchase order:
One time set up price
Monthly charge (upon activation)
Estimated monthly price $ 104.85
Product Quantity Unit price Subtotal
Location Activation 1 $ 100.00 $ 100.00
Product total $ 100.00
Shipping
Standard Shipping 6 $ 15.00 $ 90.00
Subtotal (excludes taxes) $ 190.00
County - Sales Tax $ 0.00
State - Sales Tax $ 0.00
County - District Tax $ 0.00
Total one time set up price $ 190.00
Product Quantity Unit price Subtotal
Unlimited Extension ^^ 17 $ 17.99 $ 305.83
Local Company Number ^^ 1 $ 4.99 $ 4.99
Yealink SIP-T46U with Power Supply - Rental ^^ 6 $ 3.99 $ 23.94 Fees
Recovery Fee $ 63.00
Emergency Services Fee $ 16.83
Subtotal $ 414.59
Taxes
County - Sales Tax $ 0.75
State - Sales Tax $ 3.59
State - E911 (VoIP) $ 6.97
Item: 8
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^^ Discount pricing does not apply to add-ons, certain features, hardware, or one-time charges. Taxes, fees, customs and duty are not included.
Please note:
1. Notwithstanding the then-current retention period (if any) for Customer Data; upon termination of the Agreement, Customer Data will be available to retrieve or download for a period of 30 days only. Thereafter, Vonage shall permanently delete all Customer Data. If termination occurs before the expiry of the then-current retention period (whether the standard inclusive period or extension to that period), no refund will be available to the Customer.
2. Payments are due in the currency and on the terms and frequency stated in this Sales Order.
3. Any applicable taxes and fees will be determined based on the laws and regulations of the applicable authority(ies) governing the provision of the Services and purchase of Vonage Equipment in the Country/Region/location provided by Customer on this Sales Order Validity and Authorized Signatures
This Sales Order remains valid for acceptance by Customer until the Sales Order expiration date as detailed above. Upon Customer acceptance, this Sales Order constitutes the valid and binding agreement between Vonage and the Customer identified below to purchase and use the Vonage products and services specified in this Sales Order. This Sales Order, together with any terms or conditions set forth in any applicable amendment, addendum, exhibit or schedule to this Sales Order, is subject to and governed by the Terms of Service Agreement set forth at (the "TOS"), which include provisions relating to payment, service term, earlyhttps://www.vonage.com/legal/unified-communications/tos/global-vbc-tos/ termination, limitations of liability and emergency services, and which are hereby made part of and incorporated by this reference into this Sales Order. Any capitalized terms not otherwise defined in this Sales Order shall have the meaning ascribed to such terms in the TOS. The Person who has accepted this Sales Order as stated below warrants that they are authorized to accept this Sales Order and to acknowledge and accept the TOS.
The authorized representative of Customer has accepted this Sales Order effective on the date below.
Customer Information
Name: Joanne Jin
Email Address: [email protected]
Title: Manager
Accepted On:
Estimated total (all locations) One time
set up price Estimated monthly price
$ 4,282.93 $ 7,783.95
Federal - Federal Program Fee $ 41.24
State - E-988 (VoIP) $ 1.36
County - District Tax $ 0.30
State - CA Public Purpose Program Surcharge (VoIP) $ 15.30 Taxes total $ 69.51
Estimated monthly price $ 484.10
Item: 8
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CITY COUNCIL AGENDA REPORT
MEETING DATE: 11/4/2025
DEPARTMENT: City Manager
SUBJECT:
FIRST AMENDMENT TO THE AFFORDABLE HOUSING LOAN AGREEMENT
WITH NATIONAL COMMUNITY RENAISSANCE FOR THE ASPAN COURT
AFFORDABLE HOUSING PROJECT
RECOMMENDED ACTION(S):
Approve a Resolution entitled: “A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF LAKE FOREST, CALIFORNIA, APPROVING AN AFFORDABLE
HOUSING AGREEMENT BETWEEN THE LAKE FOREST HOUSING
AUTHORITY, THE CITY OF LAKE FOREST AND NATIONAL COMMUNITY RENAISSANCE”
EXECUTIVE SUMMARY:
On March 18, 2025, the City of Lake Forest (“City”) and the Lake Forest Housing Authority (“Authority”) adopted Resolution No. 2025-05 approving an Affordable Housing Loan Agreement (“Agreement”) with National Community Renaissance of California (National CORE) for the development of the Aspan Court Project (“Project”) (Attachments 1 and 2). The Agreement established the legal terms and conditions for the City’s and Authority’s loan commitment totaling $4.35 million, comprised of funds from the City’s Affordable Housing In-Lieu Fees and the Authority’s Low and Moderate Income Housing Asset Fund.
National CORE has since requested to amend the Agreement to modify the loan structure from a Construction Loan to an Acquisition Loan, which would allow the developer to acquire the project site and close escrow by the end of January 2026. The requested amendment is necessary to facilitate the timely purchase of the property and preserve the opportunity for an affordable housing development at this location.
Staff, in coordination with the City Attorney’s Office, have prepared the proposed First Amendment to the Affordable Housing Loan Agreement to reflect the revised loan terms (Attachment 3). As an added safeguard to protect the City and Authority’s financial investment, the City will be added to title on the property.
Item: 9
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At this time, staff recommend that the City Council adopt the proposed resolution approving the First Amendment to the Affordable Housing Loan Agreement between the City, Authority, and National CORE.
BACKGROUND:
The City and Authority have prioritized the development of affordable housing to meet the community’s housing needs and comply with State housing mandates.
In support of this goal, the City and Authority entered into an agreement with National CORE, a well-established nonprofit affordable housing developer, to facilitate the development of the Project.
On March 18, 2025, the City Council and Housing Authority adopted Resolution No. 2025-05, approving the Agreement and committing a total of $4.35 million in local housing funds to support the Project. The loan consists of contributions from the City’s Affordable Housing In-Lieu Fees and the Authority’s Low and Moderate Income Housing Asset Fund. The loan was originally structured as a Construction Loan to assist with the development of new affordable housing units in the City.
On June 10, 2025, the City ministerially approved Streamlined Housing Permit 01-25-5767 for the development of the Aspan Street affordable housing project.
To date, the applicant has not submitted plans for the required grading or building permits.
DISCUSSION:
Under the existing Affordable Housing Loan Agreement, the City committed to providing a $4.35 million construction loan to assist with project development costs. The intent of the loan was to serve as a local funding contribution to help leverage additional funding sources and facilitate the construction of new affordable housing units within the City.
Recently, the developer approached staff with a request to modify the use of the loan funds. Specifically, the developer is seeking approval to use the City and Authority’s loan for the acquisition of the project site rather than for construction costs as originally approved. This request arises because the property seller has expressed a desire to close escrow in the near term (by January 2026), rather than wait for the developer to secure additional financing, which is expected to take several more months.
The developer’s financing circumstances have also changed since the City first entered into the agreement. In the most recent competitive funding round, the Item: 9
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project was not awarded Low-Income Housing Tax Credits through the California Tax Credit Allocation Committee (“TCAC”). According to the developer, this outcome was primarily due to the highly competitive nature of the funding round, as well as the County of Orange’s decision not to issue Project-Based Vouchers (“Vouchers”) during that cycle. The Vouchers were a key component of the original financing plan and were expected to strengthen the project’s competitiveness in the TCAC application process.
Despite these setbacks, the developer remains committed to pursuing the project and intends to reapply for TCAC funding and other available financing programs in future rounds. In the interim, the ability to use City and Authority loan funds for site acquisition would allow the developer to secure control of the property and continue to advance predevelopment activities while additional funding sources are pursued. To safeguard the City and Authority investment, the City will be added to the property title as a co-beneficiary on the title.
Staff Recommendation
Staff recommend that the City Council amend the existing Affordable Housing Loan Agreement to permit the use of the City and Authority’s $4.35 million in loan funds for the acquisition of the project site, subject to conditions that ensure the property remains restricted for affordable housing purposes. These conditions would include recording appropriate affordability covenants, requiring repayment or conversion of the loan should the project fail to secure construction financing within a specified period, and ensuring compliance with all applicable program requirements. Allowing the use of City and Authority funds for acquisition at this time would preserve the opportunity for an affordable housing development on this site and maintain progress toward the City’s long-term housing goals.
At this time, staff recommend that the City Council approve a resolution, subsequently approving the First Amendment to the Agreement between the City and National CORE.
California Environmental Quality Act
The Agreement is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(3) and 15378(b)(4) of the State CEQA Guidelines, which provides that the definition of a CEQA project does not include the creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. The agreement is not a project because it merely provides financial assistance for a ministerially approved affordable housing development that was not a project subject to CEQA review pursuant to Government Code Section 21080(b)(1). As Item: 9
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such, the Agreement is not a project subject to CEQA and no further environmental review is required.
Notwithstanding the foregoing, if the Agreement is a project subject to CEQA, the action approving the Agreement is exempt from CEQA as it is in furtherance of a permanent supportive housing project which is statutorily exempt from CEQA pursuant to California Government Code Section 65651(b)(2). If approved, City staff will file a Notice of Exemption within 5 days of this action.
FISCAL IMPACT:
There is minimal fiscal impact associated with the recommended action.
ATTACHMENTS:
1. Resolution No. 2025-05
2. City Council Agenda Report 3/18/2025
3. Resolution No. 2025-XX
Initiated By: Adrian Grijalva, Economic Development/Housing Manager Submitted By: Keith Neves, Assistant City Manager
Approved By: Debra Rose, City Manager
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ATTACHMENT 1
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RESOLUTION NO. 2025- 05
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE
FOREST, CALIFORNIA, APPROVING AN AFFORDABLE HOUSING -
AGREEMENT BETWEEN THE CITY OF LAKE FOREST E-LAKE
FOREST HOUSING AUTHORITY AND NATIONAL COMMUNITY
RENAISSANCE
WHEREAS, on September 14, 2023, the City of Lake Forest (" City") issued a Notice of Funding Availability (" NOFA") to develop additional housing affordable to lower - income households within the community. The NOFA was issued to enable the selection of a qualified development partner. In March 2024, the City approved an Exclusive Negotiation Agreement (" ENA") with National Community Renaissance (" Developer") to develop housing affordable to lower - income households.
WHEREAS, Developer is in escrow or has purchased, that certain real property located at 22471 Aspan St, Lake Forest, CA 92630 ( APN 617-491-03 and APN 617-491- 04), for the construction of a 50 - unit residential rental complex that will also include a dedicated room with its own entrance and restroom for Lake Forest Police Services to use for report writing and as a breakroom (" Project").
WHEREAS, the City, Lake Forest Housing Authority (" Authority") and the Developer mutually seek to enter into an Affordable Housing Agreement (" AHA") for the Project, attached to this Resolution as Exhibit A, to facilitate development of the Project, and its 50 - unit residential rental complex and dedicated Lake Forest Police Services room, through development incentives provided in exchange for the construction of residential units designed and marketed to meet the needs of low income households subject to the conditions and requirements set forth therein; and WHEREAS, City and Authority desires to assist Developer in the construction and development of the Project by providing financial assistance in the form of a loan in the amount not to exceed Four Million Three Hundred Fifty Thousand Dollars 4,350,000.00), which is funded through the following: ( i) Three Million Seven Hundred Thousand Dollars ($ 3,700,000.00) of In - Lieu Fees available from the City's Affordable Housing Trust Fund, and ( ii) Six Hundred Fifty Thousand Dollars ($ 650,000.00) of funds available from the Authority's Low- and Moderate - Income Housing Asset Fund; and WHEREAS, the Project is in the best interest of the City and the health, safety and welfare of the residents of the City, and in accordance with the public purposes and provisions of applicable federal, state and local laws and requirements; and WHEREAS, the City's approval of the AHA is not a project under the California Environmental Quality Act (" CEQA") as it is merely a governmental funding mechanism. 1 I Resolution 2025--05
ATTACHMENT 1
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If however it is a project under CEQA, the City find's that its approval of the AHA is exempt from CEQA pursuant to Government Code Section 65651(b)(2); and WHEREAS, members of the public have been provided the opportunity to comment upon the Affordable Housing Agreement.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE FOREST DOES RESOLVE, DETERMINE, FIND AND ORDER AS FOLLOWS:
SECTION 1. RECITALS. The City Council hereby finds that the foregoing recitals are true and correct and are incorporated herein as substantive findings of this Resolution.
SECTION 2. CEQA. The City Council finds that the AHA is not subject to the California Environmental Quality Act ( CEQA) pursuant to Sections 15060(c)(3) and 15378(b)(4) of the State CEQA Guidelines, which provides that the definition of a CEQA project does not include the creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. The AHA is not a project because it is an agreement to provide financial assistance for a ministerially approved affordable housing development that was not a project subject to CEQA review pursuant to Government Code Section 21080(b)(1). As such, the AHA is not a project subject to CEQA and no further environmental review is required.
Notwithstanding the foregoing, the City also finds that if the AHA is a project subject to CEQA, the action approving the AHA is exempt from CEQA as it is in furtherance of a permanent supportive housing project which is statutorily exempt from CEQA pursuant to California Government Code Section 65651(b)(2). City staff is hereby directed to file a Notice of Exemption within 5 days of this action.
SECTION 3. CITY COUNCIL ACTION. The City Council hereby approves the Affordable Housing Agreement (" Agreement") in substantially final form, attached hereto as Exhibit A, as may be amended by the City Manager or City Attorney, and incorporated herein by reference. The City Council authorizes the Mayor to sign the Agreement in its final form, as such procedure is set forth within the Agreement.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Lake Forest, California at a regular meeting of the City Council held on this 18th day of March, 2025. 2 I Resolution 2025--05
ATTACHMENT 1
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SCOT VOIGTS
MAYOR
ATTEST:
LISA BERGLUN
CITY CLERK
APPROVED AS TO FORM:
L 1
MATTHEW RICHARDSON
CITY ATTORNEY
3 I Resolution 2025--05
ATTACHMENT 1
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STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF LAKE FOREST )
I, Lisa Berglund, City Clerk of the City of Lake Forest, California do hereby certify that the foregoing Resolution No. 2025-05 was duly passed and adopted at a regular meeting of the Lake Forest City Council on the 18th day of March 2025 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
COUNCIL MEMBERS: CIRBO, PEQUErIO, TETTEMER, VOIGTS, YU
COUNCIL MEMBERS:
COUNCIL MEMBERS:
COUNCIL MEMBERS:
LISA BERGLU > MPA
CITY CLERK
4 I Resolution 2025--05
ATTACHMENT 1
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EXHIBIT A
AFFORDABLE HOUSING AGREEMENT
538/062266-0220
1018037.04 a04/01 25
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AFFORDABLE HOUSING AND LOAN AGREEMENT
(Aspan Court Affordable Housing Project)
by and between
CITY OF LAKE FOREST,
a California municipal corporation,
and
CITY OF LAKE FOREST HOUSING AUTHORITY
and
National Community Renaissance of California,
a California nonprofit public benefit corporation
[Dated as of _____________, 2025 for reference purposes only]
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1. DEFINITIONS.
2. FINANCING................................................................................................................... 5
2.1 Amount and Source of City Loan ....................................................................... 6
2.2 Cost Reductions or Increases .............................................................................. 6
2.3 Permissible Use of City Loan; Eligible Loan Expenses ..................................... 7
2.4 City Loan Funding Conditions............................................................................ 7
2.5 Disbursements of City Loan ............................................................................... 8
2.6 Repayment of City Loan; Deed of Trust ............................................................. 9
2.7 Execution and Delivery of Documents ............................................................... 9
2.8 Borrower's Evidence of Financial Capability ..................................................... 9
3. DEVELOPMENT OF THE PROJECT. ....................................................................... 13
3.1 Scope of Development ...................................................................................... 11
3.2 Development Standards .................................................................................... 12
3.3 No Commitment to Development ..................................................................... 13
3.4 Future Proposals Subject to Review ................................................................. 13
3.5 Community Outreach ........................................................................................ 13
3.6 Final Plans ......................................................................................................... 14
3.7 Schedule of Performance .................................................................................. 14
3.8 Compliance with Permits and Laws ................................................................. 14
3.9 Insurance ........................................................................................................... 15
3.10 Right of Access ................................................................................................. 16
3.11 Borrower Responsible for Cost of Development .............................................. 16
3.12 Indemnity .......................................................................................................... 16
3.13 Prevailing Wage ................................................................................................ 16
3.14 Relocation ......................................................................................................... 17
4. USE OF SITE; AFFORDABILITY COVENANTS. ................................................... 20
5. OPERATING STANDARDS ....................................................................................... 21
5.1 Selection of Tenants ........................................................................................... 21
5.2 Occupancy Limits .............................................................................................. 21
5.3 Income of Tenants.............................................................................................. 21
5.4 Onsite Services................................................................................................... 21
5.5 Property Manager............................................................................................... 19
5.6 Property Management Plan ................................................................................ 20
5.7 Gross Mismanagement....................................................................................... 20
5.8 Code Enforcement ............................................................................................. 21
6. DEFAULTS AND REMEDIES. .................................................................................. 22 Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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6.1 Defaults-General ............................................................................................... 23
6.2 Institution of Legal Actions .............................................................................. 23
6.3 Applicable Law ................................................................................................. 24
6.4 Additional City Remedies ................................................................................. 24
6.5 Rights and Remedies are Cumulative ............................................................... 24
7. GENERAL PROVISIONS. .......................................................................................... 24
7.1 Attorneys’ Fees ................................................................................................. 24
7.2 Notices .............................................................................................................. 24
7.3 Reserved ............................................................................................................ 25
7.4 Binding on Heirs ............................................................................................... 25
7.5 Entire Agreement, Waivers, and Amendments ................................................. 25
7.6 Interpretation; Governing Law ......................................................................... 25
7.7 Authority ........................................................................................................... 25
7.8 Nonliability of City Officials and Employees .................................................. 26
7.9 Enforced Delay; Extension of Times of Performance ...................................... 26
7.10 Severability ....................................................................................................... 26
7.11 Representations and Warranties ........................................................................ 26
7.12 City Contract Administration ............................................................................ 27
7.13 Plans, Drawings and Documents to be Assigned to City.................................. 27
7.14 Execution in Counterpart .................................................................................. 27
7.15 Attachments ...................................................................................................... 27
ATTACHMENTS
1 LEGAL DESCRIPTION OF SITE
2 SCHEDULE OF PERFORMANCE
3 PROJECT BUDGET
4 PROMISSORY NOTE SECURED BY DEED OF TRUST WITH ASSIGNMENT OF RENTS
5 DEED OF TRUST WITH ASSIGNMENT OF RENTS
6 REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND
RESTRICTIONS
7. BORROWER’S PRO FORMA
8. CERTIFICATE OF COMPLETION
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AFFORDABLE HOUSING AND LOAN AGREEMENT
This AFFORDABLE HOUSING AND LOAN AGREEMENT ( this “Agreement”) is made and entered into o n _______, ____, 2025, by and among the CITY OF LAKE FOREST, a California municipal corporation , the CITY OF LAKE FOREST HOUSING AUTHORITY (collectively herein referred to as the “City”) and NATIONAL COMMUNITY RENAISSANCE OF CALIFORNIA, a California nonprofit public benefit corporation (the “Borrower”). The City and Borrower are herein occasionally referred to individually as “ party” and collectively as “parties.”
R E C I T A L S
A. Borrower is in escrow to acquire or has acquired that certain real property consisting of approximately 1.62 acres of land area located in the City of Lake Forest, County of Orange, State of California, as more particularly described in the legal description attached hereto as Attachment No. 1 (the “Site” or the “Property”).
B. Borrower desires to develop the Site with a 50-unit affordable residential rental complex and related interior and exterior improvements on the proposed 1.62 acre site (the “Project”). Borrower shall develop the units and related improvements pursuant to the terms and conditions of this Agreement. The Project will be operated as a long -term affordable housing project, with Forty-Nine (49) units to be rented at an Affordable Rent for a period of fifty -five (55) years as more particularly described in the Regulatory Agreement a ttached here to as Attachment 6. If there are on-site and /or off-site improvements , they will be called out in the Project development and building plans and permits to be approved by City.
C. City desires to assist Borrower in the development of the Proj ect by providi ng financial assistance to Borrower in the form of a loan in the amount not to exceed Four Million Three Hundred Fifty Thousand Dollars ($4,350,0 00) for certain acquisition and development expenses associated with the Project. The referenced amount has two funding sources: (1) Three Million Seven Hundred Thousand Dollars ($3,700,000) is in-lieu fees received by the City under City’s Developer fund affordable housing program and 2) Six Hundred Fifty Thousand Dollars ($650,000) funded by the Housing Authority Low and Moderate Income Housing Asset Fund.
D. The Project is in the best interest of the City and the health, safety and welfare of the residents of the City, and in accordance with the public purposes and provisions of applicable federal, state and local laws and requirements.
C O V E N A N T S
Based upon the foregoing Recitals and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Borrower hereby agree as follows:
1. DEFINITIONS.
The fol lowing terms a s used in this Agreement shall have the meanings given below unless expressly provided to the contrary:
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1.1 “Affordable Rent” shall mean a cost not in excess of that which may be charged the applicable household in conformity with the Prescribed Rent Levels an d Tenant Mix pursuant to those limitations established by TCAC and, as applicable, this Agreement . The current Affordable Rent is as follows, but is subject to change pursuant to state law , as issued by the California Department of Housing and Community Development, or TCAC. The following table is meant to be illustrative of Affordable Rent, however, Borrower is required to ensure applicable affordability restrictions follow the more restrictive limits based on funding sources.
INCOME LIMIT
CATEGORY BASED
ON 2024 HCD
INCOME LIMITS
2 PERSON
HOUSEHOLD
4 PERSON
HOUSEHOLD
ONE
BEDROOM
TWO
BEDROOM
THREE
BEDROOM
Extremely Low
Housing (>30%
AMI)
$33,270 $41,610 $780 $936 $1,081
Very Low Income
(>40% AMI)
$44,360 $55,480 $1,040 $1,248 $1,442
Very Low Income
(>50% AMI)
$55,450 $69,360 $1,300 $1,560 $1,803
Low Income
(>60% AMI)
$66,540 $83,220 $1,560 $1,872 $2,163
Median Income
(>70% AMI)
$77,630 $97,090 $1,820 $2,184 $2,524
Moderate Income
(>80% AMI)
$88,720 $110,960 $2,080 $2,496 $2,885
1.2 “Agreement” sha ll mean this Affordable Housing and Loan Agreement between City and Borrower, including all exhibits and other documents attached hereto.
1.3 “Borrower” shall mean National Community Renaissance of California, a California nonprofit public bene fit corporatio n. The term “ Borrower” includes any legally permissible assignee or successor to the rights, powers, and responsibilities of Borrower hereunder, in accordance with this Agreement and with Section 25 of the Regulatory Agreement.
1.4 “City” shall mean the City of Lake Forest, a municipal corporation, organized under the laws of the State of California and having its offices at 100 Civic Center Drive, Lake Forest, CA 92630.
1.5 “City Loan” shall mean the loan in the amount not to exceed the sum of Four Million Three Hundred Fifty Thousand Dollars ($4,350,000) to be provided by City to Borrower, as more fully explained in Section 2 of this Agreement. The City Loan has two funding sources: (1) Three Million Seven Hundred Thousand Dollars ($3,700,000) is in-lieu fees received by the City under City’s Developer fund affordable housing program and 2) Six Hundred and Fifty Thousand Dollars ($650,000) funded by the Housing Authority Low and Moderate Income Housing Asset Fund.
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1.6 “City Note” shall mean the Promi ssory Note Sec ured by Deed of Trust with Assignment of Rents, in the form attached hereto as Attachment No. 4 which sets forth the terms for Borrower’s repayment of the City Loan to City.
1.7 “Deed of Trust” shall mean the Deed of Trust With Assignment of Rents in the form attached hereto as Attachment No. 5 which secures Borrower’s payment obligations under the City Note.
1.8 “Deferred Developer Fee” shall mean the portion of the Developer Fee that is to be paid to Borrower after the completion of the Project out of income gene rated from the Project.
Borrower shall notify City of the amount of the Deferred Developer Fee , if any, in connection with Borrower’s submittal of its evidence of financial capability pursuant to Section 2.8 of this Agreement.
1.9 “Developer Fee” shall mean t he gross fee to be paid to Borrower for the development of the Project in the amount of Two Million Eight Hundred Thousand Dollars ($2,800,000). It is anticipated Borrow will receive payment of that much of the Developer Fee which might be paid in cash in compliance with TCAC regulations in cash from funding sources for the Project.
1.10 “Effective Date” shall mean the date this Agreement is approve d by City , which date shall be inserted in the preamble to this Agreement.
1.11 “Eligible Loan Expenses” shall mean th e expenses set forth under the headings “Direct Construction Cost,” and “Soft Costs” in the Project Budget for which the City Loan may be used.
1.12 “Extremely Low -Income Households” shall mean households earning not greater than thirty (30%) of t he Orange Coun ty Median Income pursuant to Health and Safety Code Section 50106.
1.13 “Funding Conditions” shall mean the conditions set forth in Section 2.4 of this Agreement that must be satisfied prior to City providing the City Loan to Borrower.
1.14 “Funding Conditions Satis faction Date” shall mean the date on which all of the Funding Conditions are actually satisfied.
1.15 “General Partner Capital Contribution” shall mean the capital contribution made by the General Partner in the form of equity payment or a loan th at is paid to the Project prior to permanent loan conversion in the amount of One Hundred Dollars ($100).
1.16 “Area Median Income ” or “AMI for Orange County” or “Median Income” means the most recent applicable county family income published by California Tax Credit Allocation Committee (TCAC) for that portion of Orange County in which the Project is located.
1.17 “Permanent Supportive Housing” shall mean permanent housing with no limit on the length of stay that is occupied by the target population (Extremely Low-Income Households) and that is linked to onsite or offsite services that assist the supportive housing residents in Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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retaining the housing, improving his or her health status, and maximizing his or her ability to live and, when possible, work in the community, pursuant to Health and Safety Code Section 50490.
1.18 “Permitted Encumbrances” shall have the meaning ascribed in Section 2.9.1 of this Agreement.
1.19 “Prevailing Wage Action ” shall mean a ny of the following: (a) any determination by the California Department of Industrial Relations that prevailing wage rates should have been paid, but were not; (b) any determination by the California Department of Industrial Relations that higher prevailing wage rates than those paid should have been paid; (c) any administrative or legal action or proceeding arising from any failure to comply with the Federal Davis -Bacon Act (codified as 40 U.S.C. §§ 3141 et seq.) or California Labor Code Sections 1720 through 1781, as amended from time to time, regarding prevailing wages, incl uding maintaining certified payroll records; or (d) any administrative or legal action or proceeding to recover wage amounts at law or in equity.
1.20 “Prescribed Rent Levels and Tenant Mix” shall mean , based upon all Project funding sources, the following (unless modified with prior approval of the City): (a) Twenty (20) one-bedroom units, Fifteen (15) of which shall be occupied as Permanent Supportive Housing, Five (5) of which shall be occupied by 50% Very Low Income Households; (b) Sixteen (16) two- bedroom units, Two (2) of which shall be occupied by 30% Extremely Low Income Households, One (1) of which shall be occupied by 50% Very Low Income Households, and Thirteen (13) of which shall be occupied by 60% Low Income Households; and (c) Fourteen (14) three-bedroom units, Two (2) of which shall be occupied by 30% Extremely Low Income Households, and Three (3) of which shall be occupied by 60% Low Income Households, and Two (2) of which shall be occupied by 70% Low Income Households, and Six (6) of which shall b e occupied by 80% Low Income Households, and One (1) which shall be a Manager’s Unit which is exempt from income/tenancy restrictions or other affordability requirements.
1.21 “Project” shall mean the demolition of the existing improvements on the Site, the grading of the S ite and the development on the Site of a 50-unit apartment project with landscaping, driveways, and related improvements, and all other on -site and off -site improvements required for development, with all improvements to be consistent with th e development and building plans and permits to be approved by City. In the event of any inconsistency between the description of the Project in this Agreement and the approved plans and permits, the approved plans and permits shall govern.
1.22 “Project Budget” shall mean the cost estimates for Borrower’s development of the Project set forth in Attachment No. 3 to this Agreement. The Project Budget may not be materially changed without the prior written approval of City (a material change is a change that causes the total Project costs to increase or decrease from what is shown in the Project Budget or that causes any line item in the Project Budget to increase or decrease by more than 10%). Any changes to the Project Budget, whether or not requiring the approval of City, shall be submitted to City. If the Project Budget is revised as permitted herein, all references herein to the “Project Budget” shall be deemed to refer to the revised Project Budget.
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1.23 “Regulatory Agreement” shall mean the Regulatory Agreemen t between City and Borrower regulating the operation and of the Site, in the form attached hereto as Attachment No.
6. 1.24 “Schedule of Performance” shall mean that certain Schedule of Performance attached hereto as Attachment No. 2 setting out the dates and/or time periods by which certain obligations set forth in this Agreement must be performed.
1.25 “Site” or “Property” shall mean that certain real property located in the City of Lake Forest, more particularly described in the legal description attached hereto as Attachment No. 1.
1.26 “Tax Credit Allocation Date” shall mean the date that Borrower secures approval by TCAC of an allocation of tax credits pursuant to the terms set forth in Section 2.9.2(a) of this Agreement.
1.27 “TCAC” shall mean the California Tax Credit Allocation Committee.
1.28 “30% Very Low Income Households” shall mean households earning not greater than thirty percent (30%) of the Area Median Income for Orange County.
1.29 “40% Very Low Income Households ” shall mean households earning not greater than forty percent (40%) of the Area Median Income for Orange County.
1.30 “50% Very Low Income Households” shall mean households earning not greater than fifty percent (50%) of the Area Median Income for Orange County.
1.31 “60% Low Income Households” shall mean househol ds earning not great er than sixty percent (60%) of the Area Median Income for Orange County.
1.32 “70% Low Income Households” shall mean households earning not greater than seventy percent (70%) of the Area Median Income for Orange County.
1.33 “80% Low Income Households” shall mean ho useholds earning not greater than eighty percent (80%) of the Area Median Income for Orange County.
2. FINANCING.
2.1 Amount and Source of City Loan . In order to assist in the development of affordable rental housing within the territorial limits of the City, Ci ty shall, subject to the terms and conditions set forth herein, and provided Borrower is not in default of this Agreement, provide Borrower financial assistance in the form of a loan not to exceed the sum of Four Million Three Hundred Fifty Thousand Dollars ($4,350,000) (the “City Loan”). The City Loan has two funding sources: (1) Three Million Seven Hundred Thousand Dollars ($3,700,000) is in- lieu fees received by the City under City’s Developer fund affordable housing program and 2) Six Hundred Fifty Th ousand Dollars ($65 0,000) funded by the Housing Authority Low and Moderate Income Housing Asset Fund.
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(a) Limitation on Funding Use. Borrower is expressly limited on the use of the funding received through the Housing Authority Low and Modera te Income Housing Asset Fund to funding the construction of the units reserved for 30% Low Income Households. Any other use of these funds is expressly prohibited.
2.2 Cost Reductions or Increases . The p arties acknowledge and agree that the City Loan is inten ded to partial ly finance the financing “gap” of the Project (the amount needed to pay the excess of the “Total Development Costs,” as defined herein, over the financing and other funding sources available to Borrower for construction of the Project) but in no event to provide funding (when combined with all other sources of financing and other f unding sources available to Borrower for construction of the Project) in excess of the Total Development Costs. The term “Total Development Costs ” shall mean the total cost set f orth in the Borrower’s Pro Forma (Attachment No. 7) for the items in the Pro Forma under the headings Sources and Uses of Funds (the “Development Items”). The Total Development Costs as of the Effective Date is the sum of $43,228,490.00. The parties acknowledge, however, that there may be revisions to anticipated Project costs after the Effective Date. Accordingly, for purposes of calculating the Total Development Costs, the cost figures for the Development Items shall be those in the Project Budget or B orrower’s Pro Forma, as applicable, which are approved by or accepted by, as applicable, the City in connection with Borrower’s submittal of its evidence of financial capability to develop the Project pursuant to Section 2.8 of this Agreement . The term “ Actual Development Costs” shall mean the actual and reasonable expenses incurred by Borrower for the Development Items. If at the time permanent financing for the Project closes the Actual Development Costs exceed the sum of all financing and other funding sources available to Borrower for construction of the Project (the difference being a “ Project Deficit ”), Borrower shall be solely responsible for causing payment (through third party financing or other funds) of the Project Deficit. If at the time perma nent financing for the Project closes the Actual Development Costs are less than the sum of the financing and other funding sources available to Borrower for c onstruction of the Project (the difference being a “ Project Surplus ”), then the Project Surplus s hall be applied first to pay any Deferred Developer Fee existing at the time of the close of permanent financing , excluding the $100 in capital contribution to the Project described in Section 1.9, and then to reduce or repay the City Loan, unless otherwise required by other project funding sources.
2.3 Permissible Use of City Loan; Eligible Loan Expenses . Pursuant to all of the terms and conditions of this Agreement, Borrower covenants, promises, and guarantees that any dispersed City Loan proceeds shall be used only for the Eligible Loan Expenses that are actually and reasonably incurred by Borrower directly related and necessary to the construction of the Project, and for no other purpose.
2.4 City Loan Funding Conditions . Notwithstanding any other provisio n of this Agreement to the contrary, City shall have no obligation to disburse any of the City Loan proceeds to Borrower unless all of the following conditions (collectively the “ Funding Conditions”) are satisfied:
(a) Execution and Delivery of Documents . Borrower shall have executed and delivered to City the documents referred to in Section 2.7 of this Agreement.
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(b) City Title Policy . Fidelity National Title Company with offices at 4210 Riverwalk Parkway, Suite 100 Riverside, California 92505 or such other title company approved by City ( the "Title Company ") is irrevocably committed to issue to City an ALTA lender’s policy of title insurance ( the “City Title Policy”), with liability in the amount of th e City Loan, showing fee title to t he Site vested in Borrower, insuring in favor of City the Deed of Trust , subject only to (i) the standard printed exceptions and exclusions contained in the form of the Title Policy commonly used by Title Company; (ii) non -delinquent property taxes and assessments; and (iii) such o ther matters as may be approved by City in its sole and absolute discretion. The Parties anticipate (x) that the City Title Policy will show the lien of the Deed of Trust in second priority, junior only to the lien securing the financing supplied by the construction (and permanent) lender, and (y) that the lien of the City’s Regulatory Agreement will be senior in priority to the lien securing the construction (and permanent) lender except as provided in Section 2.9.3 hereof. Borrower shall pay the premium for the City Title Policy. (c) Permits and Approvals. Borrower shall have timely obtained all land use approvals and entitlements for the Project and shall have timely obtained approval of its final grading plans and building plans for the Project and grading permits and building permits shall be ready to be issued.
(d) Subordination Agreement . City shall have approved the form of any subordination agreements.
(e) Insurance. Borrower shall have provided to City evidence of the insurance required under Section 3.10 of this Agreement. (f) Financial Capability . Borrower shall have received binding loan commitments for loans as required to fund the Project with commercially reasonable terms, including, without limitation, a binding reservation of federal low -income 4% or 9% housing tax credits pursuant to Section 42 of the Internal Revenue Code of 1986, as amended and a private activity bond. In addition, City shall have approved Borrower’s evidence of financial capability to develop the Project in accordance with Section 2.8 of this Agreement. (g) No Default. Borrower shall not be in default of any of its obligations set forth in this Agreement, and there shall be no event which, with the passage of time or the giving of notice, would constitute a default.
In the event that a ll of the Funding Conditions are not satisfied on or before the date that is the earlier of (i) the date that is 180 days after the Tax Credit Allocation Date, or such earlier time period as provided for herein, or such later deadline as may be mutually approved in writing by City and Borrower in the sole and absolute discretion of each of them, either party not in default may terminate this Agreement by delivering written notice to the other party . No termination under this Agreement shall release either party then in default from liability for such default.
2.5 Disbursements of City Loan . Provided Borrower is not in default of this Agreement, has executed and delivered and recorded all necessary documents including the documents listed in Secti on 2.7 , after the Funding Conditions Satisfaction Date City shall Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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disburse the City Loan proceeds to or for the benefit of Borrower . The Parties accept that the City will fund the entire amount of the City Loan into the escrow opened to facilitate closing of the construction loan; the City must authorize the escrow to wire the City’s funds to the construction lender at the close of the escrow, for disbursement by the construction lender in accordance with its agreement with the City. City agrees that the pr oceeds of the City Loan will be disbursed by the construction lender in full prior to the disbursement of any of the construction lender’s construction loan proceeds as “up front” funding for the payment of the construction costs of the Project . City’s obligation to mak e disbursements of the City Loan proceeds to Borrower shall be contingent and conditional upon Borrower's continuing satisfaction and the timely performance of all of its o bligations under this Agreement . The Borrower is not required to pre -pay any constru ction costs and submit invoices for reimbursement from the City. However, the Borrower covenants that the Borrower shall not use any disbursement of City Loan proceeds for non -Eligible Loan Expenses. Within thirty (30) calendar days of the issuance of the Certificate of Completion, the Borrower shall submit to the City a reconciliation of all invoices paid using City Loan proceeds. The City shall then audit the invoices to determine if the costs included in the invoices are in fact Eligible Lo an Expenses.
The City in its sole and ultimate discretion will either (i) approve the invoices in total and thus the total City Loan amount, or (ii) reject in whole or in part certain invoices that either fail to properly evidence their associated costs to the satisfact ion of the City or invoices that fail to prove, to the satisfaction of the City, that they comply as an Eligible Loan Expense. In the event of the City’s rejection under subparagraph (ii), the City will give written notice to Borrower detailing its objecti ons to all rejected invoices and Borrower will have 15 days to provide any additional data which it may have to support or clarify any or all of the rejected invoices. The City may, in its discretion, after review of such addition data, notify Borrower tha t it has reclassified an invoice as an Eligible Loan Expense, or that an invoice remains rejected. The value of any invoices that are reject by the City for any reason shall not be included as part of the City Loan and any City Loan proceeds associated with those rejected invoices shall be due to the City from the Borrower immediately upon notice to the Borrower of their rejection.
2.6 Repayment of City Loan; Deed of Trust . Borrower’s obligation to repay the City Loan shall be as set forth in the City Note. The City Note generally provides for Borrower to pay to City a percentage of the cash flow (defined therein as “Residual Receipts”) generated from operation of the Project . Borrower’s obligation to repay the City Loan will be secured by the Deed of Trust. The Deed of Trust contains an acceleration clause which generally provides that, to the extent permitted by law, in the event Borrower shall (a) directly or indirectly, voluntarily or involuntarily, sell, assign, transfer, dispose of, alienate, encumber , lease, or agree to sell, assign, transfer, dispose of, alienate, encumber, or lease all or any portion of any interest in the Site , excluding the lease of the units on the Site in accordance with the Regulatory Agreement, the lien of the Permitted Encumbrances, transfers in connection with the syndication of tax credits awarded to the Project, and any other assignment, transfer, or encumbran ce approved in writing by City; or (b) refinance any lien or encumbrance which has priority over the Deed of Trust f or a loan amount in excess of the then outstanding sum secured by such lien or encumbrance together with the reasonable cost of such refinancing or further encumber the Site; or (c) default on any of its obligations set forth in th is Agreement, the City No te, the Deed of Trust or the Regulatory Agreement or on any obligations under any documents relating to any other financing that is secured by the Site, and fail to cure the default wit hin the applicable cure period, then, or at any time thereafter, City, at its option, may declare the entire indebtedness Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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evidenced by the City Note secured by the Deed of Trust immediately due and payable and collectible then or thereafter as City may elect, regardless of the date of maturity.
2.7 Execution and Delivery of Documents. No later than five (5) days after the date the Funding Conditions in subparagraphs (b)-(g) in Section 2.3 are satisfied , Borrower shall deliver to City the following documents : (a) the City Note, executed by Borrower; (b) the Deed of Trust, execut ed and acknowledged by Borrower; and (c) the Regulatory Agreement, executed and acknowledged by Borrower. No later than the Funding Conditions Satisfaction Date and prior to City’s disbursement of any City Loan proceeds to Borrower, City sha ll execute the Regulatory Agreement and shall cause the Regulatory Agreement and the Deed of Trust to be recorded in the Official Records of Orange County, California.
2.8 Borrower's Evidence of Financial Capability . Within the time set forth in the Schedule of Performan ce, Borrower shall submit to City's Community Development Director evidence reasonably satisfactory to the Community Development Director that Borrower has the financial capability necessary for the development of the Project pursuant to this Agreement.
Such evidence of financial capability shall include all of the following:
(a) Any changes to the Project Budget.
(b) A copy of the commitment or commitments obtained by Borrower for all of the sources of funds to finance construction of the Project. All copies of commitments submitted by Borrower to City shall be certified by Borrower to be true and correct copies thereof. Each commitment for financing shall be in such form and content acceptable to City's Community Development Director to reasonably evidence a fi rm and enforceable commitment, with only those conditions which are standard or typical for the lender involved for similar projects.
(c) If the total costs set forth in the Project Budget exceed the amount of financing commitments rece ived pursuant to subpara graph (b ) above, a financial statement and/or other documentation (“pro forma statement”) reasonably satisfactory to the Community Development Director sufficient to demonstrate that Borrower has adequate funds available and committed to cove r such differe nce. The Parties acknowledge one common means of ensuring adequate funds and one method Developer may utilize to demonstrate adequate funds for Project includes deferring payment of a portion of the Developer’s Fee beyond what was identified in Borrower’s Pro Forma, so that the deferred portion (the “Deferred Developer Fee”) is paid from proceeds produced from operation of the Project.
(d) A copy of the guaranteed maximum price construction contract between Borrower and its general contractor for all of the im provements required to be constructed by Borrower hereunder, certified by Borrower to be a true and correct copy thereof. (e) A corporate surety bond or bonds or other security instrument (such as a letter of credit), approved as to form, content and company b y City’s City Manager or designee and the City Attorney, with Borrower’s contractor or contractors as principal(s), in a penal sum not less than 100% of the amount of the cost of constructing the Project guaranteeing completion of constructio n and payment of wages for services engaged and bills contracted for Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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materials, supplies and equipment used in the performance of the work, and protecting Borrower and City from any liability, losses or damages arising therefrom. If the lenders providing construction financing to the Borrower do not require and will waive the provision of payment and performance bonds, then in lieu of providing payment and performance bonds to the City, Borrower may provide a completion guaranty from National Community Rena issance of California, in such form as reasonably required by the City’s Community Development Director and the City Attorney, guarantying the lien-free completion of the Project in accordance with this Agreement. Should the City request the same, the Borrower shall pro vide financial statements of National Community Renaissance of California to the City as evidence of its financial capacity to provide such completion guaranty to protect the City. Notwithstanding the foregoing, if the construction lender acc epts an unsecu red completion/payment guaranty , in lieu of the afore referenced secured bonds, from Borrower, the City may, in its sole discretion also accept such unsecured completion/payment guaranty.
(f) The amount of any Deferred Developer Fee if Borrower is required to defer full payment of the Developer Fee from closing or equity payments in order to provide funds to pay a projected Project Deficit.
The City Manager, or his or her designee , in consultation with the Director of Finance/City Treasurer, shall complete its review of and approve or disapprove Borrower's evidence of financial capability within 14 days after a complete submittal. Notwithstanding the foregoing, City acknowledges that due to circumstances outside of Borrower’s control the period between Borrower ’s submittal of its evidence of financial capability and the closing of the financing for the Project may be less than fourteen (14) days and, in such event, City shall cooperate with Borrower in reviewing the evidence of financial capability submitted by Borrower as expeditiously as possible. If the Community Development Director shall disapprove such evidence of financing, he or she shall do so by written notice to Borrower stating the reasons for such disapproval. In such event, Borrower shall promptly resubmit its evidence of financial capability not less than fourteen (14) days after receipt of the Community Development Director’s disapproval, the Community Development Director shall reconsider such resubmittal within the same number of days allowed f or the initial submittal, and the deadlines in the Schedule of Performance shall be extended accordingly.
2.9 Additional Financing.
2.9.1 Permitted Encumbrances. Mortgages, deeds of trust, conveyances, and leases-back or any other form of conveyance required for an y reasonable method of financing shall be permitted on the terms set forth herein, but only for the purpose of securing loans of funds to be used for the acquisition, construction, development and operation of the Project , underwritten by a r eputable financial institution(s) or governmental entity(ies) that has a prior, known history of financing affordable housing projects similar to the P roject (the “Permitted Encumbrances”). Borrower shall not enter into any such conveyance for financing purposes without the prior written consent of City, which consent shall be given if such conveyance is for the purposes permitted herein and is made by a financial or lending institution, governmental agency or other acceptable person or entity capable of p erforming or c ausing to be performed Borrower’s obligations under this Agreement.
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2.9.2 Funding Sources. From and after the date of this Agreement, Borrower shall exercise commercially reasonable efforts to obtain financing for the development of the Project. Borrower inten ds to utilize financing from a variety of sources for the Project. The anticipated sources for construction and permanent financing are described below:
(a) Tax Credit Equity.
(b) Construction Loan.
(c) Permanent Loan.
(d) Orange County Housing Finance Trust Loan
(e) Project Based Vouchers
City acknowledges that the sources of funding set forth in this Section 2.9.2 are anticipated sources and that the actual sources may change due to circumstances outside the control of Borrower. Borrower shall coordinate with City any changes to the proposed sources of funding for the Project and shall otherwise keep City informed of Borrower’s efforts to obtain financing and its progress with respect thereto. If a permitted lender or tax credit investor should, as a condition of p roviding funding for the Project, request any modification of this Agreement in order to protect its interests in the Project or this Agreement, City shall consider such request in good faith consistent with the purpose and intent of this Agreement and the rights and obligations of the parties under this Agreement. The City Manager shall have the authority to approve revisions to the terms of this Agreement requested by such lender or investor.
2.9.3 Subordination. The City Manager shall have the authority to execute and deliver subordination agreements as he or she determines are commercially reasonable and consistent with the provisions, purpose and effect of this Agreement. City agrees it will subordinate the Deed of Trust to the financing referred to in S ections 2.9.2 (b), (c), & (f) .
Nothing herein shall obligate City to subordinate its Deed of Trust to any other financing. In connection therewith, the Regulatory Agreement implements the affordability requirements imposed under the entitlements and must be senior to all financing unless otherwise agreed to by City Manager or designee.
2.9.4 Notice of Default to Construction Lender; Right to Cure. Whenever City shall deliver any notice or demand to Borrower with respect to any d efault by Borrower under this Ag reement, City shall at the same time deliver a copy of such notice or demand to any lender that has provided City written request for such notice or demand. The other lenders for the Project shall (insofar as the rights of City are concerned) have the rig ht, within ninety (90) days after receipt of t he notice, to cure or remedy any such d efault and any such cure or remedy will be accepted by City as if it had been performed by Borrower.
2.9.5 Right of the City to Cure Mortgage or Deed of Trust Default . In the event of a mortgage or deed of trust default or breach by the Borrower, Borrower shall promptly deliver to City a copy of any notice of default or breach received from any other lender and City may cure the default without acceleration of the subject loan following prior notice thereof to the Borrower. In such event, Borrower shall be liable for, and City shall be ent itled to Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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reimbursement from Borrower within ten (10) days of written demand all costs and expenses associated with and attributable to the c uring of the mortgage or deed of trust default, including any default consisting of a breach of this Agreement by the Borrower, which are incurred by City. Any sums which become due to City from Borrower under the provisions of this Section
2.9.5 shall constitute a lien on the Site, effective upon recordation by City or City’s authorized agent of a notice of lien ( the “Notice of Lien ”) concerning nonpayment of any sum due hereunder. The Notice of Lien shall state (i) the amount due, which amount shall include interest at the rate of 10% from the date due to the date paid, and shall also include the cost of preparing and recording the Notice of Lien, (ii) the expenses of collection in connection with any nonpayment, including without limitatio n reasonable a ttorneys’ fees, (iii) a description of the Site, (iv) the name and address of City, (v) the name of Borrower, and (vi) in order for the lien to be enforced by nonjudicial foreclosure, the name and address of the trustee authorized by City to enforce the lien by sale. The lien established pursuant to this section may be enforced by sale of the Site by City, City’s attorneys, any title insurance company authorized to do business in California, or other persons authorized to conduct the sale as a trustee, after failure of Borrower to pay any sum due pursuant to this Agreement within 30 days after recordation of the Notice of Lien. The sale shall be conducted in accordance with the provisions of the California Civil Code applicable to the exercise of powers o f sale in mortgages and deeds of trust, or in any other manner permitted by law. City, through its agents, shall have the power to bid on the Site at the foreclosure sale, and to acquire and hold, lease, mortgage and convey the same. Suit to recover a money judgment for any amounts due under this Agreement shall be maintainable without foreclosing or waiving any lien securing the same, but this provision or any institution of suit to recover a money judgment shall not constitute an affirmation of the adeq uacy of money damages. Any recovery resulting from a suit at law or in equity initiated pursuant to this Section shall include reasonable attorneys’ fees as fixed by the court. Notwithstanding the foregoing, after the City has issued its Ce rtificate of Completion the non-recourse provisions of Section 12 of the Note shall be deemed to apply to the City’s remedies hereunder.
3. DEVELOPMENT OF THE PROJECT.
3.1 Scope of Development . The Project shall consist of the demolition of the existing improvements on the Site in accordance with plans approved by the City, the grading of the Site, and the development on the Site of a n income-qualified rental project with parking, landscaping, lighting, signage, and other amenities, and all other on -site and off -site improvements required for development of the Site, with all such improvements to be first class in architectural design and quality consistent with the development and building plans and permits to be approved by City (provided, however, that nothing herein shall represent, warrant, or guarantee that City shall approve any of such plans and permits). The Project shall provide for a maximum of fifteen (15) the total units to be set aside for permanent supportive housing (unless modified with prior approval of the city).
3.2 Policing Center. The project will include a dedicated office space for the Orange County Sheriff’s Department, to be used exclusively for any and all purposes as deemed necessary or convenient by the department, in perpetuity , unless the City elects, in its sole and exclusive discretion, to permit Borrower to use this office space for some other permitted use .
This office may be occupied by the City’s police department or any other police department contracted by the City to provide law enforcement services. The office will be equipped with a Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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restroom, a desk, and will have direct exterior access. The room shall measure approximately 132 square feet in size.
3.3 Development Standards . Borrower agrees to design a project that meets all applicable development standards in the Lake Forest Municipal Code (the “LFMC”), in addition to Borrower-requested incentives, described below:
3.3.1 Distance to Parking Stall
(a) Developer is requesting an incentive to waive the required 200’ distance from units to parking stall (LFMC Section 9.168.040(E)).
3.3.2 Open Space
(a) Developer is requesting an incentive with a reduction of the minimum private and common open space from 15,000 SF to 12,747 SF (LFMC Section 9.73.030(C)).
3.3.3 Indoor Trash Drop Stations
(a) Developer is requesting an incent ive to waive the required trash drop stations inside residential buildings . Trash drop stations are proposed outside within enclosed areas accessible to all dwelling units and to trash pickup trucks. Zoning Code Section
9.73.063(J)(2).
3.3.4 Indoor Mailboxes
(a) Developer is requesting an incentive to waive the required i ndoor mailboxes and refrigerated lockers within the residential building's ground floor. A mailbox station is provided outside. Zoning Code Section 9.73.063(J)(6)
3.3.5 All other applicable provisions for Mixed Use-43 projects in the LFMC shall apply, including without limitation Chapters 9.144 and 9.146.
3.4 No Commitment to Development. The parties agree that nothing in this Agreement is intended to commit the Borrower to complet e a particular project or to commit the City to grant any approval. The City's approval of this Agreement does not constitute approval by the City of any development of the Project or of other activity on the Site that would have a direct or reasonably foreseeable indirect environmen tal impact pursuant to CEQA. (See 14 C.C.R. §§ 15060(c); 15378(b).) Moreover, Borrower’s future use or development of the Site is expressly conditioned upon any applicable CEQA compliance. City shall conduct environmental review in accordance with CEQA pri or to taking any discretionary action with regard to any proposed development of the Site. Nothing in this Agreement shall be construed to limit the City’ s discretion to consider and adopt any mitigation measure or project alternative, including the alternative of rejecting any proposed development of the Site, as provided in Public Resources Code section 21002. Following completion of the City's environmental review of any proposed Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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development of the Site, the City shall file a notice of such approval as p rovided in Public Resources Code section 21152.
3.5 Future Proposals Subject to Review. Borrower and City shall work together to conduct environmental review in accordance with CEQA before City takes action on any plan or entitlement. The Parties agree and acknowledge that any proposed development of the Site might change as a result of various environmental factors. The scope and location of proposed development and the design of the anticipated improvements might well change to account for needs of Borrower, including changes required by any applicable CEQA process.
3.6 Community Outreach . The Borrower conducted two (2) community workshop s.
The first meeting was held at Forest Gardens Mobile Home Park located at 24001 Muirlands Blvd, Lake Forest , California 9263 0. The second was held at Mountain View located at 24551 Raymond Way. The community workshops were designed to encourage community feedback on all aspects of the project including site design, parking, traffic, landscaping, programming, tenancy, and manage ment. The Borrower prepare d and provide draft documents and presentations to City staff in advance of the meeting for review and comment.
3.7 Final Plans. Within the time set forth in the Schedule of Performance, Borrower shall submit to City for review and approval a complete set of final plans and specifications for the Project ( the “final plans ”). The final plans and drawings shall contain all information required to obtain all necessary demolition, grading and building permits required for the Project.
City shall exercise reasonable diligence to complete its review of the final plans within forty-five (45) days after a complete submittal. Any disapproval shall be in writing and shall state the reasons therefor. Upon receipt o f a disapproval, Borrower s hall, within twenty (20) days, revise or correct the final plans as necessary to conform to City requirements. The same procedures and requirements shall apply to subsequent submittals and reviews until the final plans are finally approved by City.
3.8 Schedule of Performance . Subject to the force majeure provisions of Section 7 .9, Borrower shall commence, prosecute, and complete construction of the Project within the time set forth in the Schedule of Performance. Construction shall be continuously and dilig ently pursued to completion and shall not be abandoned for more than ten (10) consecutive days, except when due to causes beyond the control and without the fault of Borrower, as set forth in Section 7.9 of this Agreement. During the course of construction, Borrower shall, if requested by City, provide to City monthly written reports on the progress of construction. Pursuant to the Schedule of Performance, Developer shall apply for the City to issue a Certificate of Completion (Attachment No. 8), which th e City will sign and deliver to Borrower if construction of the Project has been fully and finally completed by Borrower in compliance with the provisions of this Agreement and the City has issued certificates of occupancy for all units in th e Project.
Issuance by the City of a Certificate of Completion shall be deemed to constitute a termination of this Agreement, which will have no effect thereafter.
3.9 Compliance with Permits and Laws . Borrower shall carry out the design, construction and operation of the Project in conformity with this Section 3 and all applicable federal, state, and local laws, including the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the Lake Forest Municipal Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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Code, all applicable disabled and handicapped access requirements, and all environmental mitigation measures imposed as conditions of approval of the Project. In addition, Borrower shall carry out the construction of the Project and the development of the Si te in conformity with all applicable federal and state labor laws , including, without limitation, any requirement under either the Davis-Bacon Act to pay prevailing wage rates in effect for the area of the Project as set by the U.S. Departmen t of Labor or under California law to pay prevailing wages and hire apprentices. With respect to Borrower’s redevelopment of the Site and construction of the Project, Borrower acknowledges and agrees that it shall be required to, and shall be required to cause all of its contractors and their contractors to, pay prevailing wages as, and if, applicable to the Project , in compliance with California Labor Code Section 1720 et seq., and shall be responsible for the keeping of all records which might be required pursuant to Labor Code Section 1770 et seq., including but not limited to Labor Code Section 1776, and complying with the maximum hours requirements of Labor Code Sections 1810 through 1815, if applicable, and complying with all applicable regulations and statutory r equirements pertaining thereto.
Borrower acknowledges and agrees that it shall be independently responsible for reviewing the applicable laws and regulations with respect to the payment of prevailing wages and complying therewith if and as a pplicable. Up on any request by City, Borrower shall provide a true and correct copy of such payroll records as are required under applicable law. In addition to any other Borrower indemnifications of City set forth in this Agreement, Borrower shall indemnify, defend, and hold City and its officers, officials, members, employees, agents, representatives, and volunteers harmless from and against any liability, loss, damage, cost or expenses (including but not limited to reasonable attorneys’ fees, expert wi tness fees, court costs, and costs incurred related to any inquiries or proceedings) arising from or related to (a) the noncompliance by Borrower of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages and hire apprentices); (b) the implementation of Section 1781 of the Labor Code, as the same may be amended from time to time, or any other similar law; and/or (c) failure by Borrower to provide any required disclosure or identification as required by Labor Code Section 1781, as the same may be amended from time to time, or any other similar law. It is agreed by the parties that, in connection with the develop ment and construction (as defined by applicable law) of the Project, including, without limitation, any and all public works (as defined by applicable law), Borrower shall bear all risks of payment or non - payment of prevailing wages under Cal ifornia law an d/or the implementation of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. “Increased costs,” as used in this Section 3.9, shall have the meaning ascribed to it in Labor Code Section 1781, as the same m ay be amended from time to time. The foregoing indemnity shall survive termination of this Agreement and shall continue after completion of the construction and development of the Project by Borrower. Borrower shall be solely responsible fo r determining and effectuating compliance with such laws. Borrower hereby expressly acknowledges and agrees that City has not previously affirmatively represented to Borrower or its contractor(s) for the construction or development of the Project, in writing or otherwi se, in a call for bids or otherwise, that the work to be covered by this Agreement is not a “public work,” as defined in Section 1720 of the Labor Code.
3.10 Insurance. Borrower shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to City, during the en tire term of this Agreement, duplicate originals or appropriate endorsements of commercial general liability insurance policies in the Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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amount of at least Two Million Dollars ($2,000,000) combined single limit, naming City and its officers, employees, and agents as additional insureds or co -insureds. Borrower shall also furnish or cause to be furnished to City evidence of builder’s risk coverage written on a completed value basis in an amount equal to the ful l replacement cost of the improvements with coverage available on the so -called non-reporting “all risk” form of policy, including coverage against collapse, fire, and water damage, with such insurance to be in such amounts and form and written by such companies as shal l be approved by City. Such policy shall name City as a loss payee. The foregoing insurance policies:
(a) shall be primary insurance and not contributory with any other insurance which City may have;
(b) shall contain no special limitations on the scope of prot ection afforded to City and its officers, employees, agents, and representatives;
(c) shall be “date of occurrence” and not “claims made” insurance; (d) shall apply separately to each insured against whom claim is made or suit is brought, except with respect to t he limits of the insurer’s liability;
(e) shall provide that the policy will not be cancelled by the insurer or Borrower unless there is a minimum of thirty (30) days prior written notice to City;
(f) shall be written by a good and solvent insurer a dmitted in California and registered with the California State Department of Insurance; and
(g) shall be endorsed to state that any failure to comply with the reporting provisions of the policies shall not affect coverage provided to City.
Borrower shall also furnish or cau se to be furnished to City evidence reasonably satisfactory to City that Borrower’s Contractor carries workers’ compensation insurance as required by law.
Borrower agrees that the provisions of this Section 3.10 shall not be construed as limiting in any way the extent to which Borrower may be held responsible for the payment of damages to any persons or property resulting from Borrower’s activities or the activities of any person or persons for which Borrower is otherwise responsible. No later than ten (10) days after the Effective Date, Borrower shall provide evidence of the above -required insurance (such as Certificates of Insurance of appropriate insurance binders) and obtain approval thereof from City, which approval shall not be unreasonably withheld or delayed and may be waived in City’s sole and absolute discretion. Evidence of builder’s risk coverage may be provided after Borrower receives all necessary construction financing.
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3.11 Right of Access . City and its officers, officials, employees, agents an d representatives shall have the right of access to the Site, upon reasonable prior written notice, without charges or fees, for the purposes of this Agreement, including but not limited to, the inspection of the work being performed in const ructing the Pr oject, so long as City representatives comply with all safety rules and do not interfere with, delay or interrupt Borrower’s construction activities. It is understood that City do es not by this right of access assume any responsibility or liability for a negligent inspection or failure to inspect.
3.12 Borrower Responsible for Cost of Development . Except to the extent City has specifically agreed to provide the City Loan pursuant to Section 2, Borrower shall be responsible for all costs of developing the Project, including but not limited to predevelopment costs incurred for items such as planning, design, engineering, and environmental remediation; all development and building fees; the cost incurred to demolish and clear any and all existing improvements, furnishings, fixtures, and equipment from the Site requiring removal; relocation expenses payable to occupants of the Site as required; costs for insurance and bonds (as required); costs for financing; all on -site construction costs; costs for a ny necessary p ublic improvements; and legal fees.
3.13 Indemnity. Borrower shall defend, indemnify, assume all responsibility for, and hold City and their officers, officials, members, employees, agents, representatives, and volunteers, harmless from all claims, demands, da mages, defense costs or liability of any kind or nature relating to (a) any damages to property or death or injuries to persons (including reasonable attorneys’ fees and costs and expert witness fees), which may be caused by any acts or omissions of Borrower under this Agreement, whether such activities or performance of this Agreement be by Borrower or by anyone directly or indirectly employed or contracted with by Borrower and whether such damage shall accrue or be discovered before or after termination o f this Agreement, except to the extent such matters are caused by the active negligence or willful misconduct of City or its officers, officials, members, employees, agents, representatives, or volunteers acting in an official capacity, or (b ) any litigati on, administrative or adjudicative challenge by third parties to the validity, applicability, interpretation or implementation of this Agreement, or the certification or approval of the environmental document(s) with respect to th e Project and this Agreeme nt, (c) any default of th is Agreement by Borrower, or (d ) any activities or conditions in, on or under the Site.
3.14 Prevailing Wage.
3.14.1 RESPONSIBILITY. BORROWER SHALL ASSUME ANY AND
ALL RESPONSIBILITY AND BE SOLELY RESPONSIBLE FOR DETERMINING
WHETHER OR NOT L ABORERS EMPLOYED RELATIVE TO THE PROJECT WORK
MUST BE PAID THE PREVAILING PER DIEM WAGE RATE FOR THEIR LABOR
CLASSIFICATION AND THE APPLICABLE PREVAILING PER DIEM WAGE RATE PURSUANT TO EITHER THE DAVIS -BACON ACT ( 40 U.S.C. §§ 3141 ET SEQ .) OR LABOR CODE SECTIONS 1720 ET SEQ., AS APPLICABLE.
3.14.2 WAIVERS AND RELEASES . BORROWER, ON BEHALF OF
ITSELF, ITS SUCCESSORS, AND ASSIGNS, WAIVES AND RELEASES CITY FROM ANY
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LABOR CODE SECTION 1781 OR THE DAVIS -BACON ACT. RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS SECTION 3.10.2, BORROWER ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SECTION 1542, WHICH READS AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE
CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE AND THAT , IF KNOWN BY HIM OR HER , WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR OR RELEASED PARTY.
3.14.3 INITIALS. BY INITIALING BELOW, BORR OWER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF SECTION 3.9:
_________________
Initials of Authorized
BORROWER Representative
3.14.4 INDEMNITY. BORROWER SHALL INDEMNIFY CITY ,
PURSUANT TO SECTION 3. 13, AGAINST ANY PREVAILING WAGE ACTIONS
ARISING FROM THIS AGREEMENT, THE DEMOLITION WORK OR THE CONSTRUCTION ASSOCIATED WITH THE PROJECT.
3.15 Relocation Indemnification. Borrower shall have the sole and exclusive responsibility for providing reloc ation assistan ce and paying all relocation costs required , as applicable, to comply with all applicable federal and state laws, rules, and regulations , including but not limited to the California Relocation Assistance Law, Government Code Section 7260, et seq., and the implementing regulations thereto codified in California Code of Regulations, Title 25, Chapter 6, Section 6000, et seq. (collectively, the “Relocation Laws”). Any relocation shall be performed in accordance with a relocation plan approved by City. Borrower shall indemnify, defend, and hold City harmless from and against any alleged or actual claims, liabilities, damages, remedies, causes of action, demands, or losses, and other liabilities made against them related to (1) the acquisition or the use of the Site by Borrower; (2) compliance with the Relocation Laws; (3) displacement or benefits owned to tenants on the Site including without limitation claims for relocation assistance and inverse condemnation ; and (4) any other compensation of wh atever kind or nature arising from current or prior occupancy or use of the Site, and/or any move, displacement, relocation therefrom.
4. USE OF SITE; AFFORDABILITY COVENANTS.
Borrower and its successors and assigns shall use, operate, and maintain the Site as a n affordable rental housing project in accordance with the provisions of this Agreement and the Regulatory Agreement. The Regulatory Agreement provides that as all of the units in the Project except for the manager’s unit shall be rented to income-qualified tenants at Affordable Rents, as that term is defined herein and in the Regulatory Agreement, for a period of fifty -five (55) years.
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Further, as provided in Section 3.2, one office within the Project shall be provided at no cost or liability to the police departm ent for sole use by the police department for any and all purposes deemed necessary or convenient by the police department in perpetuity unless the City, in its discretion, authorizes a different use for this space . The police department shal l either be th e police department of the City or any police department that the City contracts with for police services.
The current Affordable Rent is as follows, but is subject to change pursuant to state law, as issued by the California Department of Housing and Comm unity Development, or TCAC.
The following table is meant to be illustrative of Affordable Rent, however, Borrower is required to ensure applicable affordability restrictions follow the more restrictive limits based on funding sources.
INCOME LIMIT
CATEGORY BASED
ON 2024 HCD
INCOME LIMITS
2 PERSON
HOUSEHOLD
4 PERSON
HOUSEHOLD
ONE
BEDROOM
TWO
BEDROOM
THREE
BEDROOM
Extremely Low
Housing (>30%
AMI)
$33,270 $41,610 $780 $936 $1,081
Very Low Income
(>40% AMI)
$44,360 $55,480 $1,040 $1,248 $1,442
Very Low Income
(>50% AMI)
$55,450 $69,360 $1,300 $1,560 $1,803
Low Income
(>60% AMI)
$66,540 $83,220 $1,560 $1,872 $2,163
Median Income
(>70% AMI)
$77,630 $97,090 $1,820 $2,184 $2,524
Moderate Income
(>80% AMI)
$88,720 $110,960 $2,080 $2,496 $2,885
5. OPERATING STANDARDS
5.1 Selection of Tenants. The City desires that the Project serve as many local residents and those working in the City as possible. To that end, the Borrower shall employ its best efforts to provide information to the City community regarding the availability of the units and provide guidance and instructions to interested local parties. Borrower shall be responsible for the selection of tenants for the units in compliance with this Agreement and consistent with the Prescribed Rent Levels and Tenant Mix. To the greatest extent legally allowable, preference will be afforded residents to the City and persons who are verifiably living or employed within City limits. Borrower shall conduct due diligence and background evaluation of all prospectiv e tenants, including, without limitation, a criminal background check (as legally permissible) and third-party verification of income, to evaluate references, credit worthiness, and related qualifications.
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5.2 Occupancy Limits. To the greatest extent allowed by law, the maximum occupancy of the units shall not exceed more than such number of persons as is equal to two persons per bedroom, plus one. Thus, for the one (1) bedroom units, the maximum occupancy shall not exceed three (3) persons. For the two (2) bedroom units, the maximum occupancy shall not exceed five (5) persons. For the three (3) bedroom units, the maximum occupancy shall not exceed seven (7) persons.
5.3 Income of Tenants . Each person or family qualifying to occupy one of the restricted units shall do so at the appropriate Affordable Rent, based on the most restrictive limits of Borrower’s funding source s, which meets the eligibility requirements established for the corresponding unit, and Borrower shall obtain a certification from each tenant renting or leasing each unit which substantiates such fact.
5.4 Property Manager . Borrower shall manage or cause the Project, and all appurtenances thereto that are a part of the Project, to be managed in a prudent and business -like manner, consistent with good property management standards for other comparable first quality, well-managed affordable rental housing projects in the County. Borrower may contract with a property management company or property manager, to operate and maintain the Project; provided, however, the selection and hiring of the Property Manager (and each successor or assignee), including any Affiliate, is and shall be subject to prior written approval of the City Manager (or designee) in his or her discretion. . National Community Renaissance of California shall be deemed to be an approved property management company. The Property Manager shall manage the Project in accordance with the definitions of Affordable Rent herein, the tenant selection requirements contained in Section 5. 1, and the definitions relating to income contained in Section 5. 3. Borrower shall conduct due diligence and background evaluation of any non- affiliated or potential third-party property manager or property management company to evaluate experience, references, credit worthiness, and related qualifications as a property manager. Any proposed property manager shall have significant and relevant prior experience with affordable housing projects and properties comparable to the Project and the references and cred it record of such property manager/company shall be investigated (or caused to be investigated) by Borrower prior to submitting the name and qualifications of such proposed property manager to the City Manager for review and approval. A comp lete and true copy of the results of such background evaluation shall be provided to the City Manager. Approval of a Property Manager by the City Manager shall not be unreasonably delayed but shall be in his/her sole reasonable discretion, and the City Manager shall us e good faith efforts to respond as promptly as practicable in order to facilitate effective and ongoing property management of the Project on either a temporary or permanent basis. The replacement of a Property Manager by Borrower and/or the selection by Borrower of any new or different Property Manager during the Affordability Period shall also be subject to the foregoing requirements , except in the case of temporary management by a lender or limited partner of Borrower, which shall be immediately submitt ed to City for approval and will not last longer than 30 days.
5.5 Property Management Plan . Within the time set forth in the Schedule of Performance, Borrower shall prepare and submit to the City Manager for review and approval, a management pl an for the Pro ject which must include (i) a detailed plan and strategy for long term marketing, operation, maintenance, repair and security of the Project, (ii) a description of social services for the residents of the units, (iii) on-site parking policies , (iv) the met hod of Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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selection of tenants, (v) rules and regulations for tenants, and (vi) other rental policies for the Project ( the “Property Management Plan ”). The City Manager shall review and shall act reasonably to approve or disapprove the Property Management Pl an within a reasonable time.
The approval of the Property Management Plan is a necessary condition precedent to approval by City of Project building plans. Subsequent to approval of the Property Management Plan by the City Manager the ongoing management and operation of the Project shall be in compliance with the approved Property Management Plan. During the Affordability Period, Borrower and its Property Manager may from time to time submit to the City Manager proposed amendments to the Property Management Plan, the implementation of which shall also be subject to the prior written approval of the City Manager.
5.6 Code Enforcement . Borrower acknowledges and agrees that the City, and its employees and authorized agents, shall have the right to conduct code compliance and/or code enforcement inspections of the Project and the units, both exterior and interior, at reasonable times and upon reasonable notice (not less than forty-eight (48) hours’ prior notice, except in an emergency) to Borrower and/or an indi vidual tenant. If such notice is provided by City representative(s) to Borrower, then Borrower (or its Property Manager) shall immediately and directly advise any affected tenant of such upcoming inspection and cause access to the area(s) and/or unit(s) a t the Project to be made available and open for inspection. Borrower shall include express advisement of such inspection rights within the lease/rental agreements for each unit in the Project in order for each and every tenant and tenant hou sehold to be a ware of this inspection right.
6. DEFAULTS AND REMEDIES.
6.1 Defaults-General. Failure or delay by either Party to perform any term or provision of this Agreement constitutes a default under this Agreement; provided, however, such Party shall not be deemed to be in default if (a) it cures, corrects, or remedies such default within thirty (30) days after receipt of a notice from the other Party specifying such failure or delay, or (b) for defaults that cannot reasonably be cured, corrected, or remedi ed within such time period, if such Party commences to cure, correct, or remedy such failure or delay within such time period after receipt of a notice from the other Party specifying such failure or delay, and diligently prosecutes such cure, correction or remedy to completion, within an additional sixty (60) days following the conclusion of such thirty (30) day period (for a total of ninety (90) days). The injured Party shall give written notice of default to the party in default, specifying the default complained of by the injured Party. Except as required to protect against further damages, the injured Party may not institute legal proceedings against the Party in default until the time for cure, correction, or remedy of a default has expired. Except as otherwise e xpressly provided in this Agreement, any failure or delay by a Party in giving a notice of default or in asserting any of its rights and remedies as to any default shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it deprive such Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies.
6.2 Institution of Legal Actions . In addition to any other rights or remed ies, either Party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purposes of this Agreement. Such Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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legal actions must be instituted and maintained in the Superior Court of the County of Orange, State of California, or in any other appropriate court in that county.
6.3 Applicable Law . The internal laws of the State of California without regard to conflict of law principles shall govern the interpretation and enforcement of this Agreement.
6.4 Additional City Remedies . In addition to any other rights or remedies available at law or in equity, upon a default of Borrower , City may do any of the following: (a) refuse to advance all or any part of th e City Loan; (b) wholly or partially suspend or terminate the award of the City Loan; (c) wholly or partially suspend or terminate this Agreement; and (d) require Borrower to repay any City Loan funds which City determines were not expended in compliance with the requirements of this Agreement . Upon the occurrence of an event which, with the passage of time or the giving of notice, would constitute a default of Borrower, City may temporarily withhold disbursement of City Loan proceeds pending correction of the default b y Borrower.
6.5 Rights and Remedies are Cumulative . Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of its rights or remedies shall not preclude th e exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party.
7. GENERAL PROVISIONS.
7.1 Attorneys’ Fees. If either party commences an action against the other party arising out of or in connection with this Agreement, the prevailing party shall be entitled to recover reasonable attorney’s fees and costs of suit from the losing party.
7.2 Notices. All notices to be delivered under this Agreement to the other party shall be addressed to the respective parties as set forth below or to such other address and to such other persons as the parties may hereafter designate by written notice to the other parties hereto:
To City:
City of Lake Forest
100 Civic Center Drive
Lake Forest, CA 92630
Attention: Debra Rose, City Manager
Facsimile: (949) 461-3410
Email: [email protected]
Copy to:
Best Best & Krieger LLP
18101 Von Karman Avenue, STE 1000
Irvine, CA 92612
Attention: Elizabeth Hull, Esq.
Facsimile: (949) 263-2608
Email: [email protected]
To Borrower:
National Community Renaissance of California
9692 Haven Avenue, Suite 100
Rancho Cucamonga, CA 91730
Email: [email protected]
Copy to:
Edward A. Hopson
655A North Mountain Avenue
Upland, CA 91786
Email: [email protected]
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[email protected]
Notices personally delivered ; delivered through the United States mail, by registered or certified mail, postage prepaid; by means of prepaid overnight deli very service; or by email are acceptable forms of notice. Notices shall be deemed given upon receipt in the case of personal delivery, two days after deposit in the mail, or the next business day in the case of email or overnight delivery. Such written notices, demands, and communications shall be sent in the same manner to such other addresses as any Party may from time to time designate in writing. Notices transmitted electronically which are sent after 5:00 p.m. on a business day or on a weekend or holiday shall be deemed received at 8:00 a.m. on the n ext successive business day unless the sender receives a notice that the transmittal could not be delivered to the intended recipient.
7.3 RESERVED
7.4 Binding on Heirs . This Agreement shall be binding upon the parties hereto and their respective heirs, representatives, transferees, successors, and assigns.
7.5 Entire Agreement, Waivers, and Amendments . This Agreement incorporates all of the terms and conditions mentioned herein, or incidental hereto, and supersedes all negotiations and previous agreements between the parties with respect to all or part of the subject matter hereof. All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the party to be charged. Any amendment or modification to this Agreement must be in writing and executed by City and Borrower.
7.6 Interpretation; Governing Law. This Agreement shall be construed according to its fair meaning and as if prepared by both parties hereto. This Agreement shall be construed in accordance with the internal laws of the State of California.
7.7 Authority. The person(s) executing this Agreement on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agr eement on beha lf of said party, (iii) by so executing this Agreement, such party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other agreement to which said party is bound.
7.8 Nonliability of City Officials and Employees . No member, official, employee, or contractor of City shall be personally liable to Borrower in the event of any default or breach by City or for any amount which may become due to Borrower or on any obli gations under the terms of this Agreement.
7.9 Enforced Delay; Extension of Times of Performance . In addition to specific provisions of this Agreement, and except as expressly set forth in this Section 7.9, performance by either party hereunder shall not be deemed to be in default and such party shall be entitled to an extension of time to perform its obligations hereunder where delays in performance are due to causes beyond the control and without the fault of such party, including as applicable: war; insurrection; strike s; lockouts; riots; floods; earthquakes; fires; casualties; acts of the public enemy; epidemics; quarantine restrictions; federal, state or local declarations of emergency; freight embargoes; lack of transportation; unusually severe weather; inability to s ecure necessary labor, materials or tools; delays of any contractor, subcontractor or supplies; acts of the other Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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party; acts or the failure to act of City or any other public or governmental agency or entity (except that any act or failure t o act of or by City shall not excuse performance by City).
Notwithstanding the foregoing, Borrower’s inability to secure satisfactory financing, interest rates, and market and economic conditions shall not entitle Borrower to an extension of time to perform. An extension of time for any cause permitted under this Section 7.9 shall be limited to the period of the enforced delay, which period shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to th e other party within thirty (30) days of knowledge of the commencement of the cause. If no written notice is sent within thirty (30) days, for purposes of measuring the extension period for performance of the obligation in question, the period of the enfo rced delay shall commence to run from the date written notice is sent to the other party.
Times of performance under this Agreement may be extended by mutual written agreement of City and Borrower.
7.10 Severability. If any term, provision, cove nant, or condi tion of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of this Agreement shall not be affected thereby to the extent such remaining provisions are not rendered impractical to perform taking into consideration the purposes of this Agreement. In the event that all or any portion of this Agreement is found to be unenforceable, this Agreement or that portion which is found to be unenforceable shall be deemed to be a statement of in tention by the parties; and the parties further agree that in such event, and to the maximum extent permitted by law, they shall take all steps necessary to comply with such procedures or requirements as may be necessary in order to make valid this Agreement or that por tion which is found to be unenforceable.
7.11 Representations and Warranties . Borrower and each person executing this Agreement on behalf of Borrower represents and warrants that: (a) Borrower is a California corporation in good standing and aut horized to do business in the County of Orange; (b) Borrower has all requisite power and authority to carry out its business as now and whenever conducted and to enter into and perform its obligations under this Agreement and the agreements attached to this Agreement; ( c) by proper action of Borrower, Borrower’s signatories have been duly authorized to execute and deliver this Agreement; (d) the execution of this Agreement by Borrower does not violate any provision of any other agreement to which Borrower is a party; and (e) except as may be specifically set forth in this Agreement, no approvals or consents not heretofore obtained by Borrower are necessary in connection with the execution of this Agreement by Borrower or with the performance by Borrower of its obligations hereunder.
7.12 City Contract Administration . The City Manager for the City (or his or her authorized representative) shall administer this Agreement on behalf of City and shall have the authority to issue interpretations, waive provisions , extend deadlines, and enter into amendments of this Agreement on behalf of City so long as such actions do not substantially add to the costs of City as specified herein.
7.13 Plans, Drawings and Documents to be Assigned to City . If this Agreement is terminated for any reason o ther than an uncured material default by City hereunder , Borrower covenants to immediately assign and release to City any ownership rights and interest that Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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Borrower may have in any and all of the plans, drawings, and permits as have been pre pared for the development of the Project prior to the termination; provided, that Borrower does not covenant to convey the copyright or other ownership rights of third parties.
7.14 Execution in Counterpart . This Agreement may be executed in several counterparts, and all so executed shall constitute one agreement binding on all parties hereto, notwithstanding that all parties are not signatories to the original or the same counterpart.
7.15 Attachments. Attachment Nos. 1 -8 attached to this Agreement are incorporate d herein by this reference and made a part hereof. Said Attachments are identified as follows:
ATTACHMENT NO. 1 LEGAL DESCRIPTION OF SITE
ATTACHMENT NO. 2 SCHEDULE OF PERFORMANCE
ATTACHMENT NO. 3 PROJECT BUDGET
ATTACHMENT NO. 4 PROMISSORY NOTE SECURED BY DEED OF TR UST
WITH ASSIGNMENT OF RENTS
ATTACHMENT NO. 5 DEED OF TRUST WITH ASSIGNMENT OF RENTS ATTACHMENT NO. 6 REGULATORY AGREEMENT AND DECLARATION
OF COVENANTS AND RESTRICTIONS
ATTACHMENT NO. 7 BORROWER’S PRO FORMA
ATTACHMENT NO. 8 CERTIFICATE OF COMPLETION
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, City and Borrower have executed this Agreement as of the date set forth above.
“CITY”
CITY OF LAKE FOREST, a California
municipal corporation
By:
Mayor
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
CITY OF LAKE FOREST
HOUSING AUTHORITY
By:
Name: _______________________________
Its:___________________________________
ATTEST:
Secretary
“BORROWER”
NATIONAL COMMUNITY RENAISSANCE
OF CALIFORNIA, a California nonprofit
public benefit corporation
By:
Michael M. Ruane
Its: President
Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Mayor
Scott Voigts
(Acting)
(Acting)
Item: 9
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ATTACHMENT NO. 1
LEGAL DESCRIPTION OF SITE
That certain property located in the City of Lake Forest, County of Orange, State of California, described as follows:
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LAKE
FOREST IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL 3, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 140, PAGES 40 AND 41 OF PARCEL MAPS , RECORDS OF SAID ORANGE COUNTY.
ALSO EXCEPTING THEREFROM ALL MINERAL RIGHTS, INCLUDING WITHOUT
LIMITATION ALL OIL, GAS, HYDROCARBON, AND SIMILAR RIGHTS, AND ALL
WATER, WATER RIGHTS, GEOTHERMAL STEAM, POWER WITHIN OR UNDERLYING
SAID PROPERTY, TOGETHER WITH THE PERPETUA L RIGHT OF DEVELOPMENT THEREOF; PROVIDED, HOWEVER, THAT THE RIGHTS THEREIN RESERVED AND
EXCEPTED DO NOT INCLUDE THE RIGHT TO ENTER UPON THE SURFACE AND THE TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED IN DEED FROM OCCIDENTAL LAND, INC., A CALIFORNIA CORPORATION, RECORDED OCTOBER 14, 1977, IN BOOK 12414, PAGE 1152, OFFICIAL RECORDS.
APN 617-491-03; APN 617-491-04
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ATTACHMENT NO. 2
SCHEDULE OF PERFORMANCE
ITEM OF PERFORMANCE TIME FOR PERFORMANCE
1. Borrower provides evidence of insurance
(§ 3.9).
Within 10 days after the Effective Date.
2. Borrower submits final building plans for City's
review and approval (§ 3.6).
within 45 days after the Tax Credit
Allocation Date
3. City approves (or disapproves) final building
plans for Project (§ 3.6).
Within 30 days after a complete submittal.
4. If final building plans are disapproved (Item No.
3), Borrower makes necessary corrections and
revisions and resubmits and uses reasonable
diligence to seek approval of same (§ 3.6).
Within 20 days after notice of disapproval.
5. City approves final building plans for Project
and issues Ready to Issue Permit letter.
Within 150 days after the Tax Credit
Allocation Date.
6. Borrower submits evidence of financial
capability (§ 2.8).
Within 120 days after the Tax Credit
Allocation Date.
7. City’s Finance Director approves (or
disapproves) Borrower's evidence of financial
capability (§ 2.8).
Within 14 days after receipt of submittal.
8. Borrower executes and delivers to City the City
Note, Deed of Trust and Regulatory Agreement
(§ 2.7).
Within 5 days after the satisfaction of all of
the Funding Conditions in Section 2.3(b)-
(g).
9. All of the Funding Conditions are satisfied
(§ 2.4).
Within 180 days after the Tax Credit
Allocation Date, or such earlier time as
provided in the Agreement with respect to
individual Funding Conditions.
10. City executes and records the Deed of Trust and
Regulatory Agreement (§ 2.7).
Within 10 days after the Funding Conditions
Satisfaction Date.
11. City disburses the City Loan to Borrower
(§ 2.5).
After the Funding Conditions Satisfaction
Date.
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ITEM OF PERFORMANCE TIME FOR PERFORMANCE
12 City approves Property Management Plan (§5.6) Prior to issuance of building permits.
13. Borrower obtains building permits and
commences construction of the Project (§ 3.7).
Within 180 days after the Tax Credit
Allocation Date.
14. Borrower completes construction of the Project
and obtains City approval of final inspection and
Certificate of Completion (§ 3.7).
Within twenty-four (24) months after
commencement of construction.
It is understood that the foregoing Schedule is subject to all of the terms and conditions of the text of the Agreement. The summary of the items of performance in this Schedule is not intended to supersede or modify the more complete descripti on in the text ; in the event of any conflict or inconsistency between this Schedule and the text of the Agreement, the text shall govern.
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ATTACHMENT NO. 3
PROJECT BUDGET
SOURCES
Permanent Loan $ 8,324,431
City Loan $ 4,350,000
OCHFT Loan $ 3,490,000
General Partner $ 100 Tax Credit Equity $ 27,063,959 Total $ 43,228,490
USES
Land $ 6,100,000
Fees, Permits, Studies $ 1,485,000 Direct Construction Costs $ 24,434,772 Indirect Construction
Costs $ 3,313,189
Rent Up/Marketing $ 131,000 Financing Costs $ 3,588,103 Other: Reserves, Dev Fee $ 3,064,546 Other: Perm Relocation $ 1,111,880 Total $ 43,228,490
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ATTACHMENT NO. 4
PROMISSORY NOTE SECURED BY DEED OF TRUST
WITH ASSIGNMENT OF RENTS
[INSERT DATE] (the “Note Date”)
FOR VALUE RECEIVED, the undersigned, [CORPORATE NAME ], a California [CORPORATE TYPE] (the “Borrower”), promises to pay to the CITY OF LAKE FOREST, a California municipal corporation and the CITY OF LAKE FOREST HOUSING AUTHORITY (collectively referred to herein as the “City”), the sum of $4,350,000.00, together with interest, plus such other costs, charges, and fees which may be owing from time to time, all subject to the terms, conditions, and provisions hereinafter set forth in this Promissory Note Secured by Deed of Trust With Assignment of Rents (the “Note”).
Reference is made to the following (which, to gether with this Note are sometimes collectively referred to as the “Loan Documents”):
(i) The Affordable Housing and Loan Agreement, with all Attachments thereto, by and between City and Borrower ’s predecessor in interest National Community Ren aissance of Ca lifornia (the “Developer”), dated _______________, 202 5, as may be amended from time to time ( the “Affordable Housing Agreement ”), which sets forth terms and conditions for Borrower’s development and operation of an affordable apartment project ( the “Project”) on that certain real proper ty consisting of approximately 1.6 acres of land area located in the City of Lake Forest, County of Orange, State of California, as more particularly described in the legal description attached as Attachment No . 1 to the Aff ordable Housing Agreement ( the “Site”). Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Affordable Housing Agreement.
(ii) The Regulatory Agreement by and between City and Borrower, in the form attached as Attachment No. 6 to the Affordable Housing Agreement, and recorded against the Site on or about the date of this Note, as may be amended from time to time (the “Regulatory Agreement”). (iii) The Deed of Trust With Assignment of Rents that shall be execu ted by Borrower for the benefit of City securing the City Loan, and recorded against the Site on or about the date of this Note in the Official Records of Orange County, California, as may be amended from time to time ( the “Deed of Trust”).
1. Loan Amount; Interest. The principal amount of the City’s loan to Borrower is $4,350,00.00 ( the “City Loan ”). Simple interest shall accrue on the outstanding principal balance at the rate of three percent (3%) per annum, or the maximum legal limit, whi chever is less, from the date that the permanent loan made to Borrower for the Project funds and records Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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until accrued interest and unpaid principal due hereunder are paid in full. The City Loan shall be disbursed to or for the benefit of Borrower in accordance with th e terms set forth in the Affordable Housing Agreement.
2. Terms of Repayment.
(a) Annual Residual Receipt Payments. Commencing the first year in which the Residual Receipts (as defined below) is a positive number, and if the California Department of Ho using and Community Development (“ HCD”) or any successor entity thereto is a lender on the Project or originates a loan for the Project from a State of California loan program which it administers (such as, for example, a “No Place Like Home” loan), then, consistent with Section 8314(a)(2)(A) of the California Code of Regulations, Title 25, Section 1, Chapter 7, Subchapter 19, borrower shall make annual payments to City in an amount equal to an allocable portion of 50% of the Residual Receipts (as defined b elow) produced from the operation of the Project based upon the ratio of the initial principal balance of this Note to the respective initial principal balances of all promissory notes evidencing loans to the Project which are paid from Residual Receipts p roduced from operation of the Project . Payments for each calendar year shall be made on May 31 of the following year. For purposes of this Section 2, the following definitions shall apply
The term “Residual Receipts ” shall mean, with respec t to any calen dar year, the amount of Income for such calendar year reduced by the Expenses for such calendar year.
The term “ Income” shall mean all money and income derived by Borrower from the Site, including without limitation all rental income paid by tenants, all rental subsidy payments made by governmental agencies, deposits forfeited by tenants, net proceeds received by Borrower from vending and laundry room machines, and income from any source related to Borrower’s ownership and operation of the Project, but not including the following:
tenant deposits unless forfeited, interest received on all required reserve accounts, loan proceeds, capital contributions or loans to Borrower by its partners or similar advances, amounts released from reserves or interest on reserves, or insurance or condemnation proceeds.
The term “Expenses” shall mean the sum of the following:
(i) regularly scheduled non-contingent payments of interest, principal, impounds (so long as required impound expense costs do not dupli cate other per mitted Expenses), and fees and charges, if any, required on loans in accordance with the original loan documents evidencing such indebtedness, or any amendments or refinancing of such indebtedness consented to by City;
(ii) all normal and necessary expen ses actually and reasonably incurred by Borrower in owning, operating, maintaining, repairing, and replacing the Project on the Site, including insurance premiums, taxes and assessments, maintenance and repair expenses (to the extent that suc h repairs and/ or maintenance expenses are not paid out of reserves), utilities (not paid by the tenants), accounting, audit and legal expense attributable to the Project , real property taxes and assessments , office expenses Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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incurred for the operation of the Project; sal aries, wages, or other compensation to the employees or agents of Borrower employed on -site, if any, in connection with the maintenance, leasing, administration or operation of the Project, along with all withholding taxes, insurance premiums , social security payments and other payroll taxes or payments; issuer, occupancy and monitoring inspection fees, if any; and the cost of social programs at the Project approved by City ( (Expenses will not include depreciation and other similar non -cash expenses, repai rs or expenses paid from insurance proceeds and any costs or expenses paid or reimbursed by third parties, and federal and state taxes on income);
(iii) property management fees which shall not exceed six percent (6%) of the gross rental inc ome received b y Borrower in connection with its rental of units at the Project for the applicable calendar year;
(iv) deposits and required payments into accounts maintained for operating reserves and/or an operating deficit reserves and/or capital replacement reserves and/or any similar reserve account established and maintained in satisfaction of any lender or investor requirement approved by the City, in an annual amount of $500 per unit per year, or such higher amount as required by a senior mortgagee or the tax cre dit investor and approved as an Expense by City in its reasonable discretion; (v) reserves for operating expenses in an amount sufficient to pay six (6) months of the expenses referred to in clauses (i) -(iii) above, or such higher amount as required by a s enior mortgagee or the tax credit investor and approved as an Expense by City in its reasonable discretion; and any required debt service reserve payment required by the terms of the Amended and Restated Agreement of Limited Partnership of Borrower.
(vi) any asset management fee paid to a limited partner in Borrower not to exceed $7,500 per calendar year;
(vii) any partnership and/or asset management fee paid to a non -profit general partner of Borrower not to exceed $20,000 per calendar year; (viii) payment of any Deferred Developer Fee paid to the “Developer,” which shall be National Community Renaissance of California unless otherwise provided in the Amended and Restated Agreement of Limited Partnership (the “ Limited Partnership Agreement ”) f or Borrower or an assignee of Borrower, approved by the City’s City Manager or designee and City Attorney as provided in the Affordable Housing Agreement, together with interest at the interest rate thereon required to comply with applicable provisions of such Limited P artnership Agreement until such Deferred Developer Fee and interest have been paid in full, all to the extent such Deferred Developer Fee is not paid from capital contributions to Borrower or from other financing proceeds;
(ix) payments to re pay (A) any vo luntary loan or capital contribution made by the tax credit investor (which has been approved by the City’s City Manager or Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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designee and City Attorney) while acting in its capacity as a limited partner of Borrower (a “tax credit investor”) under the provis ions of Borrower’s Limited Partnership Agreement, and (B) any payments to repay any tax credit adjustor(s) which might be required pursuant to applicable provisions of such Limited Partnership Agreement approved by the City; and
(x) and all o ther fees and expenses which may be permitted by the annual budget approved by the City.
Expenses will be considered “normal and necessary” if incurred generally for similarly structured, financed and restricted rental properties. Expenses shall not include any items paid from any of the reserves described in subsections (iv) and (v) above. Commencing on the first January 1 that occurs after a period of one (1) year has expired since the completion of the Project and on each January 1 thereafter, the fe es in subsecti ons (iii), (vi) and (vii) may be increased by three percent (3%) of the then current amount. (b) Maturity Date; Extension . Unless due at an earlier time by virtue of the acceleration of the balance hereof in accordance with Sections 4 or 5 of this Note, any remaining unpaid principal balance of this Note, plus unpaid accrued interest, and any other amounts due hereunder shall be due and payable in a single lump sum payment on the date that is fifty -five (55) years from the date that all units in the Project have received all required occupancy permits from the City, but in no event later than the date that is fifty-seven (57) years after the Note Date. (c) Cost Reductions or Increases . The parties acknowledge and agree that the City Loan is intended to partially finance the financing “gap” of the Project (the amount needed to pay the excess of the Total Development Costs over the financing and other funding sources available to Borrower from all other sources for construction of the Pro ject) but in n o event to provide funding (when combined with all other sources of financing and other funding sources available to Borrower for construction of the Project) in excess of the Total Development Costs. The term “ Total Development Costs ” shall mean the tota l cost set forth in the Project Budget for the items in the Project Budget under the headings Sources and Uses (the “Development Items ”). For purposes of calculating the Total Development Costs, the cost figures for the Development Items sha ll be those in the Project Budget that is approved in connection with Borrower’s submittal of its evidence of financial capability to develop the Project pursuant to Section 2.8 of the Affordable Housing Agreement. The term “ Actual Development Costs” shall mean the act ual and reasonable expenses incurred by Borrower for the Development Items. If the Actual Development Costs exceed the sum of all financing and other funding sources available to Borrower for construction of the Project (the difference being a “ Project Deficit”), Borrower shall be solely responsible for causing payment (through third party financing or other funds or through deferring payment of Developer Fee ) of the Project Deficit. If the Actual Development Costs are less than the sum of the financing a nd other funding sources available to Borrower for construction of the Project (the difference being a “Project Surplus”), then the Project Surplus shall be applied first to pay the deferred developer fees and then to reduce or repay the City Loan, unless otherwise required by other project funding sources.
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(d) Late Charge. If Borrower fails to timely make a required payment within 10 days following the due date of such payments, interest at the rate of ten percent (10%) per annum or the maximum legal ra te then applicable, whichever is less, shall accrue on the outstanding installment amount due dating from the day when that installment payment was due. (e) Prepayment. Borrower shall have the right to prepay all or any portion of this Note at any time without penalty.
(f) Application of Payments. All payments shall be first credited to accrued and unpaid interest, next to costs, charges, and fees which may be owing from time to time, and then to reduction of the outstanding principal balance. All pa yments shall be made in lawful money of the United States.
(g) Place of Payment . Payments shall be made to City at 100 Civic Center Drive, Lake Forest, California, 92630 or at such other address as City or the holder of this Note may direct pursuant to written notice delivered to Borrower.
3. Records; Audit. Borrower shall submit to City on or before the date that is 90 days following the end of each calendar year a draft of an audited financial statement of Borrower for the preceding calendar year pre pared by an independent professional accountant of Borrower's choosing in accordance with generally accepted accounting principles, showing in reasonably accurate detail the anticipated amount of Residual Receipts for the calendar year covered by the draft audited financial statement. The final Borrower audited financial statement shall be delivered to the City within 1 20 days following the end of each calendar year.
Remittance of any payment due to the City shall be delivered to the City within 150 days following the end of each calendar year. Within 90 days following the end of each calendar year, Borrower shall also submit to the City a balance sheet, statement of income and expense and cash flows prepared by Borrower's accountant in accor dance with generally accepted accounting principles and accompanied by an accountant report and opinion (provided, however, a calculation of Residual Receipts shall not be due until 150 days after the close of each calendar year). The reports and certificates referred t o herein shall be in such form and contain such details and breakdown as the City may deem reasonably acceptable. The acceptance by City of payments shall be without prejudice to City's right to an examination of the books and records of Borrower in order to verify the amount of Residual Receipts. Borrower shall keep and maintain full, complete, accurate and auditable books, records and accounts of all Income and Expenses for a calendar year or partial calendar year until the date that it is at least 4 year s after the installment payment for such year is made. City and its designated agents and employees shall have the right at reasonable times upon request, to examine and inspect all of the books and records of Borrower for the purpose of inve stigating and verifying the accuracy of any payment by Borrower. In addition, City may twice in any calendar year cause an audit of Borrower’s books and records to be made by an independent certified accountant of City’s selection, and if the statement of the amount du e to City made by Borrower shall be found to be inaccurate, then and in that event, there shall be an adjustment and one party shall pay to the other on demand such sums as may be necessary to settle in full the accurate amount that should ha ve been paid for the period or periods covered by such inaccurate statement and payment, together with interest on any past due amounts in accordance with Section 2(d) herein. If said audit shall disclose an inaccuracy in favor of Borrower which resulted in an underpay ment greater than Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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three percent (3%) for the applicable period, then Borrower shall immediately pay to City the cost of such audit; otherwise, the cost of such audit shall be paid by City. If City requests an inspection or makes an audit as set forth here in, the necessary books and records shall be produced at the Site within five (5) business days after request therefor.
4. Default. Borrower shall be deemed in default of this Note in the event (i) Borrower fails to timely make a required payment within t en (10) days following the due date of any payment due hereunder, or (ii) Borrower is in default of any of the other terms of this Note and such default is not cured within thirty (30) days after Borrower’s receipt of written notice from City specifying th e event constituting the default, or (iii) Borrower is in default of the Affordable Housing Agreement, at any time when the Affordable Housing Agreement is in force, but not after the City has issued its Certificate of Compliance (which is the deemed termination date for the Affordable Housing Agreement), the Deed of Trust, or the Regulatory Agreement or on any obligations under any documents relating to any other financing that is secured by the Site , and fails to timely cure such default unde r the terms of the applicable agreement, or within thirty (30) days of receipt of notice from City if there is no cure period, it being understood and agreed by Borrower that a default of any of the foregoing agreements shall be a default of this Note. If the Borrower fails to take corrective action to cure a default within the time limits provided in this Note, and providing that the City shall have been provided with an address for notice for the tax credit investor and, if any, a special limited partne r (a “special limited partner”), City shall concurrently with notice to the Borrower also give written notice of such default to the tax credit investor and the special limited partner. In such event, the tax credit investor and the special limited partner shall have the same time period as that given to Borrower hereunder to cure such default; provided, however, if the tax credit investor and the special limited partner find it necessary to remove the general partner of the Borrower (a “General Partner”) in order that such parties may cure such default, then the tax credit investor and the special limited partner may remove and replace the General Partner with a substitute general partner which is the special limited partner or is a nonprofit entity reasonably acceptabl e to the City, upon City’s written approval, such removal and replacement to be completed in accordance with language for the same in the Limited Partnership Agreement which has been approved by the City. Such replacement general partner shal l affect a cure of any such default within the time period set out in this Note provided for the cure of such default. The City agrees to accept on the same basis as if made by Borrower any corrective action to cure or remedy any default which might be tendered by any t ax credit investor or special limited partner (which party shall be under no obligation to tender any such cure or remedy). Additionally, in the event that a tax credit investor or special limited partner is precluded from curing a default of Borrower due to an inability to remove the General Partner of Borrower as a result of a bankruptcy, injunction, or similar proceeding by or against Borrower or its General Partner, providing that the tax credit investor or special limited partner proceeds promptly and with reasonable diligence to remove the General Partner of the Borrower under such circumstances and provides the City with evidence reasonably demonstrating the same, the City agrees to forebear from completing a foreclosure (judicial or non -judicial) during the period during which the tax credit investor and the special limited partner are so precluded from acting. In no event shall the City be precluded from exercising any of its remedies in the event of a Borrower default under this Note if the City’s security becomes or is to become materially jeopardized by a failure to cure a default or by the default itself. If a default of this Note is not cured or remedied as provided in this Section Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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4, the City may it its option exercise any of its r emedies hereunder, including accelerating the required full payment of this Note.
5. Acceleration Upon Sale, Lease, Encumbrance, Refinance . To the extent permitted by applicable law, in addition to City’s acceleration rights under Section 4, if Borrower shall (i) direc tly or indirectly, voluntarily or involuntarily, sell, assign, transfer, dispose of, alienate, encumber, lease, or agree to sell, assign, transfer, dispose of, alienate, encumber, lease all or any portion of any interest in the Site (excludin g the lease of the units on the Site in accordance with the Regulatory Agreement, the lien of the Permitted Encumbrances, any other assignment, transfer, or encumbrance approved in writing by City , and any transfer permitted by the terms of the Affordable Housing Agreem ent); or (ii) refinance any lien or encumbrance which has priority over the Deed of Trust for a loan amount in excess of the then outstanding sum secured by such lien or encumbrance together with the reasonable cost to effect such refinance or further encu mber the Site except as approved by City ’s City Manager or designee and City Attorney , then, or at any time thereafter, City, at its option, may declare the entire indebtedness evidenced hereby immediately due and payable. Notwithstanding anything to the contrary contained herein, the following transactions shall be deemed expressly permitted hereunder: (a) transfer by a tax credit investor or a special limited partner of the Borrower to any other entity which is an affiliate of such parties o r which is controlled by such parties, so long as such transfer is in compliance with the applicable terms of the Limited Partnership Agreement which has been approved by the City’s City Manager or designee and City Attorney ; (b) a change in the beneficial ownership of the tax credit investor or special limited partner so long as each such entity remains controlled by the ownership entity therefore or an affiliate thereof and such change in ownership is in compliance with applicable provisions of the Limite d Partnership Agreement which has been approved by the City’s City Manager or designee and City Attorney ; (c) the pledge or encumbrance of the interests of the tax credit investor or the special limited partner to or for the benefit of any financial institution which en ables the tax credit investor to make its capital contributions to the Borrower, as well as provision of a collateral interest given to such financial institution if and as customary in similar tax credit projects; and (d) removal of any Gene ral Partner in Borrower by the tax credit investor or the special limited partner and replacement of any removed General Partner with (y) a General Partner that is an affiliate of the tax credit investor pursuant to the applicable provisions of the Limited Partnership A greement with notice to the City’s City Manager, or (z) a General Partner that is not an affiliate of the tax credit investor with the approval of the City’s City Manager or designee and City Attorney , which consent shall not be unreasonably conditioned, delayed, or withheld.
6. Collection Costs; Litigation . If this Note is not paid when due, whether at maturity or by acceleration, Borrower promises to pay all costs of collection, including, but not limited to, attorneys’ fees and all expenses incurred in connection with the protection or realization of the collateral securing the payment hereof or enforcement of any guarantee, incurred by City on account of such collection, whether or not suit is filed hereon. In any litigation between the p arties arising out of this Note, the Superior Court of the State of California in and for the County of Orange shall have exclusive jurisdiction.
7. Waivers. To the extent permitted by law, Borrower and all endorsers, guarantors, and persons liable or to become liabl e on this Note waive presentment, protest, and demand, notice of protest, demand, and dishonor and nonpayment of this Note and any and all other Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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notices or matters of a like nature, and consent to any and all renewals and extensions near the time of payment hereof and agree further that at any time and from time to time without notice, the terms of payment herein may be modified or the security described in any documents securing this Note released in whole or in part or increased, changed, or exchanged by agreement between City and any owner of the premises affected by said documents securing this Note, without in any way affecting the liability of any party to this Note or any persons liable or to become liable with respect to any indebtedness evidenced hereby.
8. No Waiver by City . No waiver of any breach, default, or failure of condition under the terms of this Note or the Deed of Trust or the obligations secured thereby shall be implied from any failure of City to take, or any delay be implied from any failure by City in taking, action with respect to such breach, default, or failure from any prior waiver of any similar or unrelated breach, default, or failure.
9. Usury. Notwithstanding any provision in this Note, the Deed of Trust, or oth er document securing same, the total liability for payment of any interest shall not exceed the limit now imposed by applicable laws of the State of California.
10. Not Assignable . This Note shall not be assignable or assumable without the express written consent of City, which may be given or withheld in City’s sole and absolute discretion.
11. Severability; Governing Law; Amendment . The unenforceability or invalidity of any provision or provisions of this Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable.
This Note has been executed and delivered by Borrower in the State of California and is to be governed and construed in accordance with the laws thereof. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed, or terminated orally; nor shall any waiver of any provision hereof be effe ctive except by an instrument in writing signed by Borrower and City.
12. Non-Recourse Provisions. This Note shall become a nonrecourse obligation of Borrower on the date that construction of the Project is completed as evidenced by issuance by City of a certificate of occupancy for all of the units in the Project. At such time as this Note becomes nonrecourse, City agrees that Borrower and its constituent partners (the “Nonrecourse Parties”) shall not be personally liable for the payment o f any sums now or hereafter owing City under the terms of this Note. If any default should occur under the Loan Documents, City agrees that its rights, as to the Nonrecourse Parties , for any monetary claim shall be limited to a proceeding against the security for the indebtedness evidenced by this Note, and that it shall have no right to proceed directly against the Nonrecourse Parties for the satisfaction of any monetary claim against Borrower or for any deficiency judgment remaining after foreclosure of any real or personal property securing the obligations owed to City under this Note and the Loan Documents. It is expressly understood and agreed, however, that nothing contained in this Section 12 shall in any manner or way constitute or be deemed a release of the debt evidenced by the Note or otherwise affect or impair the enforceability against Borrower of the liens, deeds of trust, assignments, rights and security interests created by the Deed of Trust or any other Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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instrument or agreement evidencing, s ecuring or rel ated to the indebtedness evidenced by the Note. Nothing in this Section 12 shall: (a) preclude City from foreclosing the lien of the Deed of Trust or from enforcing any of its rights or remedies in law or in equity against Borrower or its assets except a s stated in this Section 12; (b) impair, in any manner, any right, remedy or recourse City may have against any party executing a guaranty or indemnity or any obligor of a performance or payment bond furnished under the Loan Documents pursuan t to such performance or payment bond; (c) impair, in any manner, any right, remedy or recourse City may have against the Borrower or its General Partner for fraud, waste or a material breach of any of the representations and warranties contained in any of the Loan Docu ments; (d) impair, in any manner, any right, remedy or recourse City may have against the Borrower or its General Partner for indemnification under any of the Loan Documents; (e) impair, in any manner, any right, remedy or recourse City may h ave against th e Borrower or its General Partner for Borrower’s failure to procure or maintain policies of insurance required by City to the extent of any loss proceeds which would have been generated by an uninsured loss which Borrower was required to insure against, but failed to insure against, as or if required by the Deed of Trust and the Regulatory Agreement; (f) impair, in any manner, any right, remedy or recourse City may have against the Borrower or its General Partner for any prohibited sale, trans fer, conveyanc e or encumbrance in breach of any of the Loan Documents; or (g) impair, in any manner, any right, remedy or recourse City may have against the Borrower or its General Partner as a result of any right, remedy or recourse to which City has been subrogated fo r any reason (other than to the extent Borrower has paid or performed the obligation to which City has been subrogated). [SIGNATURE ON NEXT PAGE]
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IN WITNESS WHEREOF, Borrower has executed this Note as of the date first above written.
“BORROWER”
[CORPORATE NAME ], a California
[CORPORATE TYPE]
By:
[NAME], [POSITION]
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413
ATTACHMENT NO. 5
DEED OF TRUST WITH ASSIGNMENT OF RENTS
[Attached]
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
CALIFORNIA ALL-PURPOSE NOTARY ACKNOWLEDGMENT NOTARY CIVIL CODE § 1189
STATE OF CALIFORNIA
COUNTY OF ORANGE
On _____, before me, ,
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized cap acity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of
the State of California that the foreg oing paragraph is true and correct.
WITNESS my hand and official seal.
Signature of Notary Public
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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Lake Forest
100 Civic Center Drive
Lake Forest, CA 92630
Attn: City Manager
______________________________________________________________________________ SPACE ABOVE FOR RECORDER’S USE ONLY
EXEMPT FROM RECORDING FEE PER
GOVERNMENT CODE §27383
DEED OF TRUST WITH ASSIGNMENT OF RENTS
(This Deed of Trust Contains an Acceleration Clause)
THIS DEED OF TRUST is made this ___ day of ______________, 20 25, by and among [CORPORATE NAME ], a California [CORPORATE TYPE ] (the “Trustor”), whose address is [CORPORATE ADDRESS], attn.: [CORPORATE CONTACT], the CITY OF LAKE FOREST, a California municipal corporation (the “Trustee”), and the CITY OF LAKE FOREST, a California municipal corporation , and the CITY OF LAKE FOREST HOUSING AUTHORITY ( collectively herein referred to as the “Beneficiary”).
1. Grant In Trust. For the purposes and upon the terms and conditions in this Deed of Trust, Trustor grants, transfers, and assigns to Trustee, in trust, with power of sale and right of entry and possession, the following property and any interest therein (collectively, the “ Trust Estate”): (i) the real property located in the City of Lake Forest, County of Orange, State of California described in Exhibit “A” attached hereto and incorporated herein by this reference (the “Real Property”); (ii) all buildings and other improvements and structures now or hereafter located on the Real Property (collectively, the “ Improvements” and together with the Real Property shall sometimes be referred to as the “ Property”); (iii) all existing and future leases, subleases, subtenancies, licenses, agreem ents and incentives relating to the use, occupancy or enjoyment of all or any part of the Property, together with any and all guaranties and other agreements relating to or made in connection with any of the foregoing (individually, a “ Lease”, and collecti vely, the “ Leases”); and (iv) all rents, issues, income, revenues, royalties, profits, proceeds and earnings now or hereafter payable with respect to or otherwise derived from the ownership, use, management, operation, leasing or occupancy of the Property, including, without limitation, cash or security deposited under any of the Leases to secure the performance by the lessees of their obligations thereunder (collectively, the “Rents”).
2. Obligations Secured. Trustor makes this grant and assignment for the purpose of securing the following: (i) payment of the sum of $4,350,000.00, with interest thereon according to the terms of a Promissory Note secured by Deed of Trust with Assignment of Rents of even date herewith made to Trustor, payable to the order o f Beneficiary, and any extensions or renewals thereof (the “ Note”), and all other amounts due under the Note; (ii) and payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or its successors Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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or assigns, whe n evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust.
3. Right of Acceleration upon Sale/Encumbrance, Default. In the event Trustor shall: (i) directly or indirectly, voluntarily or involuntarily , sell, assign, transfer, dispo se of, alienate, encumber, lease, or agree to sell, assign, transfer, dispose of, alienate, encumber, or lease all or any portion of any interest in the Property (excluding the lease of the units on the Property in accordance with that certain Regulatory Agreement between Trustor and Beneficiary dated on or about the date hereof and recorded against the Real Property ( the “Regulatory Agreement”), any transfer at any time prior to the Beneficiary’s issuance of a Certificate of Completion (as such term is def ined in the Loan Agreement) permitted by the terms of the Affordable Housing and Loan Agreement between Trustor and Beneficiary dated [INSERT DATE], as amended from time to time (the “Affordable Housing and Loan Agreement ” or, sometimes, the ”Loan Agreemen t”), and any transfer permitted by the lien of the Permitted Encumbrance; or (ii) refinance any lien or encumbrance which has priority over this Deed of Trust for a loan amount in excess of the then outstanding sum secured by such lien or encumbrance together with the reasonable cost of such refinance, or further encumber the Property; or (iii) default on any of its obligations set forth in the Loan Documents or on any obligations under any documents relating to any other financing that is sec ured by the Property and fail to cure the default wit hin any applicable cure period or within thirty (30) days of receipt of notice from Beneficiary if there is no cure period, then, or at any time thereafter, Beneficiary, at its option, may declare the entire indebtedn ess evidenced by the Note secured by this Deed of Trust immediately due and payable. This term “ Loan Documents ” shall mean this Deed of Trust, the Note, the Affordable Housing and Loan Agreement (at any time prior to Beneficiary’s issuance of a Certificat e of Completion ), and the Regulatory Agreement, as such agreements may be amended from time to time. Any capitalized terms contained in this Deed of Trust which are not defined herein shall have the meaning given in the Loan Agreement, unless expressly provided to the contrary.
4. Assignment of Rents and Performance of Leases.
4.1 Assignment of Rents and Leases . Trustor hereby irrevocably absolutely and unconditionally assigns and transfers to Beneficiary all of Trustor’s right, title and interest in and to the Leases and the Rents; provided, however, that so long as no Event of Default (as defined in Section 5.1 below) has occurred and is continuing, Trustor shall have the right under a license granted hereby to co llect and receive all Rents as T rustee for the benefit of Beneficiary and to apply the amounts so collected first to the payment of costs and expenses associated with the ownership, maintenance, operation and leasing of the Property, including, principal, interest and all other am ounts required to be paid under the Loan Documents, before using or applying such Rents for any other purpose. No Rents or such other income shall be distributed or paid to Trustor, unless such costs and expenses which are then due have been paid in full. Thereafter, so long as no Event of Default has occurred and is continuing, the balance may be distributed to Trustor. If an Event of Default has occurred and is continuing, Trustor’s right to collect and receive the Rents under the license granted hereb y shall cease and the license shall be revoked automatically and, pursuant to Section 5.2.1 hereof, Beneficiary shall have the right, with or without taking possession of the Property, to collect all Rents; provided, however, if such Event Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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of Default is cured, then such license shall be automatically reinstated. This is an absolute assignment and not an assignment for security only.
4.2 Covenants Regarding Leases. Trustor shall not, without the prior written consent of Beneficiary, (i) collect any rent from any lesse e for a period of more than one (1) month in advance, or (ii) execute any further assignment of any of its right, title and interest in the Leases and the Rents, except in connection with financing otherwise approved by the Beneficiary. Trustor shall (i) observe, perform and discharge each and every obligation, term, covenant, condition and agreement of Trustor under the Leases in all material respects, (ii) enforce the performance of each and every obligation, term, covenant, condition and agreement in th e Leases to be performed by any lessee or guarantor thereof in all material respects, (iii) use good faith commercially reasonable efforts to keep the Property leased at a good and sufficient rental (but at affordable rents in accordance with the Regulator y Agreement) and on such other terms and conditions as are reasonably acceptable to Beneficiary, and (iv) execute and deliver to Beneficiary upon demand, at any time and from time to time, any and all assignments and other instruments which Beneficiary may deem reasonably advisable to carry out the true purposes and intent of the assignment set forth in Section 4.1 above.
5. Events of Default and Remedies.
5.1 Events of Default . Any of the following events shall, at Beneficiary’s option, constitute an event of default (an “Event of Default”) hereunder:
5.1.1 Failure to Pay . The failure of Trustor to pay (i) within ten (10) days of its due date, any installment of principal or interest under the Note (except at maturity, by acceleration or as part of a p repayment hereunder); (ii) all outstanding principal and accrued interest under the Note at maturity, by acceleration or as part of a prepayment thereunder; or (ii) within ten (10) days after written notice that same is due, any sum as provided in this Deed of Trust or any other Loan Document or any other instrument or agreement secured hereby (other than as described in the foregoing (i) and (ii)).
5.1.2 Failure to Perform . The failure of Trustor to promptly and completely observe or perform any term, condition, covenant, agreement or obligation contained in this Deed of Trust, any other Loan Document or any other instrument or agreement secured hereby, and the continuation of such failure following the expiration of any applicable notice, cure or grace period, if any, provided for therein or herein; provided, however, that in the event no cure or grace period is otherwise provided for herein or therein, such failure shall not be an Event of Default hereunder if Trustor observes or performs such term, con dition, covenant, agreement or obligation within thirty (30) days of receipt of written notice from Beneficiary of Trustor’s failure to observe or perform any such term, condition, covenant, agreement or obligation (or if not reasonably susceptible of cure within thirty (30) days, then for a reasonable time thereafter provided the cure is commenced in thirty (30) days and diligently and continuously prosecuted to a cure within sixty (60) additional days thereafter).
5.1.3 Other Defaults . Th e occurrence o f any “default” or “Event of Default” under any of the other Loan Documents (as defined therein) or any other instrument or agreement secured hereby and the continuation of such “default” or “Event of Default” following Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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the expiration of any applicable not ice, cure or grace period, if any, provided for in such other Loan Document or such other instrument or agreement secured hereby.
5.1.4 Notwithstanding anything to the contrary contained herein, any notice required to be given to Trustor under this Deed of Trust shall also be given to any investor at the address set forth in the Affordable Housing and Loan Agreement. Investor shall have the right, but not the obligation, to cure any default of the Trustor hereunder.
5.2 Remedies. During the existence of any Event of Default, Beneficiary may, at its option, declare all indebtedness secured hereby, and the same shall thereupon become, immediately due and payable without any presentment, demand, protest or notice of any kind.
Thereafter, Beneficiary may, at its option:
5.2.1 Termination of License . Subject to the provisions of Section 5.1 hereof, terminate Trustor’s right and license to collect the Rents, and either in person or by agent, with or without bringing any action or proceeding, or by a rece iver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Trust Estate or any part thereof, in its own name or in the name of Trustee, and do any acts which it deems necessary or desir able to preser ve the value, marketability or rentability of the Trust Estate, or any part thereof or interest therein, make, modify, enforce, cancel or accept the surrender of any Lease, increase the income therefrom or protect the security hereof and, with or without t aking possession of the Trust Estate, sue for or otherwise collect the Rents, including those past due and unpaid, and apply the same, less reasonable, actual, out -of-pocket costs and expenses of operation and collection, including, without l imitation, rea sonable, actual, out -of-pocket attorneys’ fees, upon any indebtedness secured hereby, all in such order as Beneficiary may determine. The entering upon and taking possession of all or any portion of the Trust Estate, the collection of such Rents and the a pplication thereof as aforesaid, or any of such acts, shall not cure or waive any Event of Default or recorded notice of default hereunder or invalidate any notice or act done in response to such Event of Default or pursuant to such notice of default and, notwithstanding the continuance in possession of all or any portion of the Trust Estate or the collection, receipt and application of Rents, Trustee or Beneficiary shall be entitled to exercise every right provided for in any of the Loan Documents or by la w during the existence of any Event of Default, including the right to exercise the power of sale. Failure of Beneficiary at any time, or from time to time, to collect the Rents shall not in any manner affect the subsequent enforcement of Beneficiary of the right to collect the same.
5.2.2 Appointment of Receiver. As a matter of right and without notice to Trustor or anyone claiming under Trustor, and without regard to the then value of the Trust Estate or the interest of Trustor therein, to apply to an y court having jurisdiction to appoint a receiver or receivers of the Trust Estate, and Trustor hereby irrevocably consents to such appointment and waives notice of any application therefor. Any such receiver or receivers shall have all the usual powers a nd duties of receivers in like or similar cases and all the powers and duties of Beneficiary in case of entry as provided in this Deed of Trust and shall continue as such and exercise all such powers until the later of (i) the date of confirmation of sale of the Trust Estate, (ii) the disbursement of all proceeds of the Trust Estate collected by such receiver and the payment of all expenses incurred in connection therewith, and (iii) the termination of such Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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receivership with the consent of Ben eficiary or pu rsuant to an order by a court of competent jurisdiction.
5.2.4 Judicial Foreclosure of Deed of Trust . Commence an action to foreclose this Deed of Trust as a mortgage, or specifically enforce any of the covenants hereof.
5.2.5 Power of Sale. Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to cause Trustor’s interest in the Trust Estate or any portion thereof to be sold, which notice Trustee or Beneficiary shall cause t o be transmitted and recorded, if applicable, in accordance with governing law. Upon receipt of such notice from Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such Notice of Default and after Notice of Sale having been given as required by law, sell the Trust Estate a t the time and place of sale fixed by it in said Notice of Sale, either as a whole, or in separate lots or parcels or items as Beneficiary shall deem expedient, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States payable at the time of sale. Trustor hereby expressly waives any right which it may have to direct the order in which any of the Trust Estate may be sold when it consists of more than one lot or parcel, and such order of sale , whether in a single sale or in multiple sales held on different days or at different times, shall be at the sole discretion of Beneficiary. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Truste e or Beneficiary, may purchase at such sale to the extent permitted by law. After deducting all costs, fees and expenses of Trustee and of this Deed of Trust and all reasonable, actual out -of-pocket costs, fees and expenses of Beneficiary, including reasonable, actual, out-of-pocket costs of evidence of title, and attorneys’ fees of Trustee and Beneficiary, in connection with such sale, and subject to applicable law, Trustee shall apply, in the following priority, the proceeds of sale to payment of: (i) first, all sums expended under the terms hereof, not then repaid, with interest thereon according to the terms of the Debt Instrument, (ii) second, all other sums then secured hereby, in such order of priority and in such proportion as Beneficiary in its sole discretion m ay elect, and (iii) the remainder, if any, to the person or persons legally entitled thereto. Subject to applicable law, Trustee may postpone the sale of all or any portion of the Trust Estate by public announcement at the time and place of such sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement or subsequently noticed sale, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale.
5.2.6 Other Remedies. Exercise all other rights and remedies provided herein, in any Loan Document or other document or agreement now or hereafter securing all or any portion of the obligations secured hereby, or pr ovided by law. During the existence of an Event of Default hereunder, Beneficiary may proceed in any sequence to exercise its rights hereunder with respect to all or any portion of the Trust Estate.
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5.2.7 Non-Recourse. The obligations of Trustor under the Note and this Deed of Trust are non-recourse to the extent provided in paragraph 12 of the Note.
5.3 Remedies Not Exclusive; Waiver . No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of an y other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Loan Documents t o Trustee or Beneficiary, or to which either of them may be otherwise entitled, may be exercised concurrently or independently, from time to time and as often as may be deemed expedient by Trustee or Beneficiary. If there exists additional security for the obligations secured hereby, Beneficiary, at its sole option, and without limiting or affecting any of the rights or remedies hereunder, may exercise any of the rights or remedies to which it may be entitled hereunder either concurrently with whatever rig hts it may have in connection with such other security or in such order and in such manner as Beneficiary may deem fit without waiving any rights with respect to such other security.
6. Incorporation of Fictitious Deed of Trust . To protect the security of this Deed of Trust, and with respect to the Property above described, except where such terms and provisions are contrary to any of the provisions set forth in Section 1 through and including Section 5 above (and all of the subparts thereof), in which ca se the provisions hereof shall control, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed th at each and al l of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, namely:
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COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BO OK
PAGE
Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762 Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 128 7 621
Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 206 7 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 197 0 56
Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585 Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183 Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 253 0 108
Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 260 7 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693 Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774
shall inure to and bind the parties hereto, with respect to the Property. Said agreements, terms and provisions contained in said subdivisi on A and B are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein.
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT Individual
Corporate Officer
Title(s) Title or Type of Document
Partner(s) Limited
General
Attorney-In-Fact Number Of Pages
Trustee(s)
Guardian/Conservator
Other: August 12, 2020
Signer is representing:
Name Of Person(s) Or Entity(ies)
Date Of Document
Signer(s) Other Than Named Above
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Trustor has caused this Deed of Trust to be executed as of the date set forth above. “TRUSTOR”
[CORPORATE NAME ], a California
[CORPORATE TYPE]
By:
[NAME], [POSITION]
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DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security of this Deed of Trust, Trustor agrees:
1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restor e promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the charact er or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. 2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance p olicy may be a pplied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof m ay be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney’s fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. 4) T o pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereo f, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary of Trustee, but without obligation so to do and without notice to or demand upon Tru stor and without releasing Trustor from any obligation hereof, may: make or do the same is such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for s uch purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, char ge or lien which in the judgment of either app ears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees.
5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with intere st from the da te of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in ef fect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maxi mum allowed by law at the time when said statement is demanded.
B. It is mutually agreed:
1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby after its due date, Ben eficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payme nt of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the maki ng of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof. 4) That upon written request of Beneficiary stating that all sums secured here by have been p aid, and upon surrender of this Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choos e and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held he reunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be describe d as “the person or persons legally entitled thereto.”
5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, pri or to any default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without not ice, either in person, by agent, or be a receiver to be appointed by a court, and without regard to the adequacy of any security for the ind ebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwis e collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney’s fees, upon any indebtedness secured hereby, and in such o rder as Benefi ciary may determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application th ereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 6) That upon default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which noti ce Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice o f sale having been given as then required by law , Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auct ion to the highest Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by pu blic announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall b e conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at suc h sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of tit le in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the re mainder, if any, to the person or persons legally entitled thereto.
7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to an y Trustee name d herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the origi nal Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. 8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender inc ludes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.
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EXHIBIT “A” TO DEED OF TRUST
LEGAL DESCRIPTION OF REAL PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITU ATED IN THE CI TY OF LAKE
FOREST IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LAKE
FOREST IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL 3, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 140, PAGES 40 AND 41 OF PARCEL MAPS, RECORDS OF SAID ORANGE COUNTY.
ALSO EXCEPTING THEREFROM ALL MINERAL RIGHTS, INCLUDING WITHOUT
LIMITATION ALL OIL, GAS, HYDROCARBON, AND SIMI LAR RIGHTS, AND ALL
WATER, WATER RIGHTS, GEOTHERMAL STEAM, POWER WITHIN OR UNDERLYING
SAID PROPERTY, TOGETHER WITH THE PERPETUAL RIGHT OF DEVELOPMENT THEREOF; PROVIDED, HOWEVER, THAT THE RIGHTS THEREIN RESERVED AND
EXCEPTED DO NOT INCLUDE THE RIGHT TO ENTER UPON THE SURFACE AND THE TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED IN DEED FROM OCCIDENTAL LAND, INC., A CALIFORNIA CORPORATION, RECORDED OCTOBER 14, 1977, IN BOOK 12414, PAGE 1152, OFFICIAL RECORDS.
APN 617-491-03; APN 617-491-04
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ATTACHMENT NO. 6
REGULATORY AGREEMENT
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427
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Lake Forest
100 Civic Center Drive
Lake Forest, CA 92630
Attn: City Manager
______________________________________________________________________________ SPACE ABOVE FOR RECORDER’S USE ONLY
EXEMPT FROM RECORDING FEE PER
GOVERNMENT CODE §27383
REGULATORY AGREEMENT
(Aspan Court Affordable Housing Project)
by and among
THE CITY OF LAKE FOREST,
a California municipal corporation,
and
THE CITY OF LAKE FOREST HOUSING AUTHORITY
and
[CORPORATE NAME],
a California [CORPORATE ENTITY TYPE]
[Dated as of _________________ ___, 2025 for reference purposes only]
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1 REGULATORY AGREEMENT
(Aspan Court Affordable Housing Project)
This REGULATORY AGREEMENT ( Aspan Court Affordable Housing Project ) ( this “Regulatory Agreement”) is made and entered into as of ______________, 202 1, by and among THE CITY OF LAKE FOREST, a California municipal corporation , and THE CITY OF LAKE FOREST HOUSI NG AUTHORITY (collectively herein referred to as the “City”), and [CORPORATE NAME], a California [CORPORATE ENTITY TYPE] (the “Owner”).
RECITALS
A. The City and the Owner entered into that certain Affordable Housing and Loan Agreement ( Aspan Court Affordable Housing Project ) dated as of _____ (the “ Affordable Housing Agreement”), which provides that the City will loan certain funds to the Owner subject to the terms and conditions of th e Affordable Housing Agreement. Under the Affordable Housing A greement, the City has agreed to provide financial assistance to the Owner for acquisition of the Property and the construction thereon by the Owner of a 50-unit multifamily residential development (the “Project”).
B. The City and the Owner desire that the Project be o perated as a multifamily residential community on the Property with the residential units made available to Qualified Households at an Affordable Rent as more specifically defined herein. This Regulatory Agreement establishes terms and condi tions which go vern the operation of the Property. The Project anticipates the following unit mix (unless modified with prior approval of the City):
20- 1-bedroom units including
o 15- 30% Households (Permanent Supportive Housing)
o 5- 50% Households
16 2-bedroom units including
o 2- 30% Households
o 1- 50% Households
o 13- 60% Households
14 3-bedroom units including:
o 2- 30% Households
o 1- 50% Households
o 3- 60% Households
o 2 - 70% Households
o 6 - 80% Households
o 1 exempt Manager’s Unit
C. The terms of the Affordable Housi ng Agreement r equire that certain covenants and affordability restrictions remain in full force and effect on the Project for a term commencing on the date of recordation of this Regulatory Agreement and continuing for fifty - five (55) years following the recordation of Certificate of Completion as defined herein (the “Term”).
D. A maximum of 98% of units in the housing complex on the Site shall be rented to Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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2 income-qualified tenants at Affordable Rents pursuant to this Agreement, as that term is defined herein and in the Affordable Housing Agreement, for Term.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND
UNDERTAKINGS SET FORTH HEREIN, AND FOR OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY
ACKNOWLEDGED, THE OWNER AND THE CITY DO HEREBY COVENANT AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS AS FOLLOWS:
1. Definitions of Certain Terms . AS USED IN THIS REGU LATORY AGREEMENT,
THE FOLLOWING WORDS AND TERMS SHALL HAVE THE MEANING AS PROVIDED IN THE RECI TALS OR IN THIS S ECTION 1, UNLESS THE SPECIFIC
CONTEXT OF USAGE OF A PARTICULAR WORD OR TERM MAY OTHERWISE REQUIRE. ALL INITIA LLY CAPITALIZED TERM S USED AND NOT OTHER WISE
DEFINED IN THE RECITALS OR IN TH IS SECTION SHALL HAVE THE MEANI NG ASCRIBED TO SUCH TERM BY THE AFFORDABLE HOUSING AGREEMENT.
1.1. 30% Household. An individual or household that has a household income equal to or less than thirty percent (30%) of then current AMI adjusted for household size, as published by TCAC annually.
1.2. 40% Household. An indiv idual or house hold that has a household income equal to or less than forty percent (40%) of then current AMI adjusted for household size , as published by TCAC annually.
1.3. 50% Household. An individual or household that has a household income equal to or less than fifty pe rcent (50%) of then current AMI adjusted for household size , as published by TCAC annually.
1.4. 60% Household. An individual or household that has a household income equal to or less than sixty percent (60%) of then current AMI adjusted for household size, as published by TCAC annually.
1.5. 70% Household. An individual or household that has a household income equal to or less than seventy percent ( 70%) of then current AMI adjusted for household size , as published by TCAC annually.
1.6. 80% Household. An individual or household that has a household income equal to or less than eighty percent ( 80%) of then current AMI adjusted for household size , as published by TCAC annually.
1.7. Affordable Rent. In reference to each Qualifying Unit, the maximum rent , with allowance for utilities, for the applicable household income as published by the TCAC annually to qualify for, receive and be in compliance with the applicable program for the Tax Credits adjusted for family size . For purposes of the calculation of Affordable Rent “adju sted for household size” shall be the federally -mandated household size assumptions as set forth in federal statutes or regulations for the Tax Credit program.
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3 1.8. AMI. The Area Median Family Income , Median Income, or AMI for Orange County means the most recent applicable county median family income published by California Tax Credit Allocation Committee (TCAC), which is applicable to the area in which the Project is located.
1.9. Annual Report. The Certification of Continuing Program Compliance attached to this R egulatory Agreement as Attachment No. 3 and incorporated by this r eference or comparable report filed annually by the Owner with TCAC or other governmental agencies.
1.10. Automobile Liability Insurance . Insurance coverage against claims of perso nal injury (including bodily injury and death) and property damage covering all the Owner owned, leased, hired and non -owned vehicles, with minimum limits for bodily injury and property damage of One Million Dollars ($1,000,000). Such insurance shall be provided by a b usiness or commercial vehicle policy and may be provided through a combination of primary and excess or umbrella policies, all of which shall be subject to pre -approval by the City, which approval shall not be unreasonably withheld, delayed or conditioned.
1.11. Certificate of Completion . The written certification of the City, in substantially the form of Attachment No. 8 attached to the Affordable Housing Agreement, certifying that the Project has been completed in compliance with the terms and conditions of this Regulatory Agreement.
1.12. City Parties . Collectively, t he City and it s commissions, agents, attorneys, officers, employees, and authorized representatives.
1.13. HUD. The United States Department of Housing and Urban Development.
1.14. Income Certificati on Form . The Certification of Tenant Eligibility attached to this Regulatory Agreement as Attachment No. 2 and incorporated by this reference, or comparable income certification form required by TCAC or other governmental agencies.
1.15. Liability Insurance . Commercial gene ral liability insurance against claims for bodily injury, personal injury, death, or property damage occurring upon, in, or about the Property, the Project or adjoining streets or passageways, at least as broad as Insurance Services Office Oc currence Form CG0001, with a minimum liability limit of Two Million Dollars ($2,000,000) for any one occurrence and which may be provided through a combination of primary and excess or umbrella insurance policies. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the Project or the general aggregate limit shall be twice the required minimum liability limit for any one occurrence.
1.16. Manager Unit . The on e (1) Three Bedroom Unit within the Project reserved exclusively for use by the on -site manager employed by the Owner or the Property Manager, as applicable.
1.17. One Bedroom Unit . Any one of the one bedroom residential accommodations within the Project.
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4 1.18. Project. The opera tion of a multi -family rental housing project which shall include not less than 50 units, ninety-eight percent (98%) of which shall be rented to Qualified Households at Affordable Rents, and all related on - and off -site improvements, as more particularly described in the Affordable Housing Agreement.
1.19. Property. Approximately 1.6 acres of land area located in the City of Lake Forest, County of Orange, State of California, is proposed to be developed as Project by Owner, more particularly described in the legal description attached hereto as Attachment No. 1.
1.20. Property Insurance . Insurance providing coverage for the Property and all improvements on or to the Property against loss, damage, or destruction by fire and other hazards encompassed under the broadest form of property insurance coverage then customarily used for like properties in the County of Orange, excluding coverage for earthquake, terrorism, theft and other perils, as reasonably approved by the City, in an amount equal to one hundred percent (100%) of the replacement value (without deduction for depreciation) of all improvements comprising the Project (excluding excavations and foundations) and in any event sufficient to avoid co -insurance and with no co -insurance penalty provision , with “ordina nce or law” coverage. To the extent customary for like properties in the County of Orange at the time, such insurance shall include coverage for explosion of steam and pressure boilers and similar apparatus located on the Property; an “increased cost of c onstruction” endorsement; and an endorsement covering demolition and cost of debris removal, all subject to policy sublimits.
Property Insurance shall also include rental or business interruption insurance in an amount, at least equal to the average annua l gross income from the Project for the preceding three (3) calendar years and providing for a 12-month extended period of indemnity.
1.21. Qualified Households. A household that (1) intends to reside in the Qualifying Unit; and (2 ) whose income does not exceed the maximum income allowable for the subject Qualifying Unit.
1.22. Qualifying Units. The 49 units of the 50 units comprised of (unless modified with prior approval of the City)::
15- One Bedroom Units occupied by 30% AMI Permanent Supportive Hou sing Households
5- One Bedroom Units occupied by 50% AMI Households;
2- Two Bedroom Units occupied by 30% AMI Households;
1- Two Bedroom Units occupied by 50%AMI Households;
13- Two Bedroom Units occupied by 60% AMI Households;
2- Three Bedroom Units occupied by 30% Households;
3- Three Bedroom Units occupied by 60% Households;
2- Three Bedroom Units occupied by 70% AMI Households;
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5 6- Three Bedroom Units occupied by 80%AMI Households; All within the Project restricted to occupancy by Qualified Househol ds as set fort h in Section 6.
1.23. Tax Credits. An allocation from TCAC of 4% or 9% federal low income housing tax credits to finance a portion of the costs of the Project, in accordance with Section 42 of the Internal Revenue Code of 1986, as amended, all associated In ternal Revenue Service regulations and all associated TCAC regulations.
1.24. TCAC. The California Tax Credit Allocation Committee or its successor in function.
1.25. Term. The period of time following the date of recordation of this Regulatory Agreement, and ending on the fifty-fifth (55th) anniversary of issuance by the City of the Certificate of Completion.
1.26. Three Bedroom Unit. Any one of the three bedroom residential accommodations within the Project.
1.27. Two Bedroom Unit . Any one of the two bedroom residential a ccommodations within the Project.
1.28. Workers Compensation Insurance . Workers compensation insurance complying with the provisions of California law and an employer’s liability insurance policy or endorsement to a liability insurance policy, wit h a minimum li ability limit of One Million Dollars ($1,000,000) per accident for bodily injury or disease, covering all employees of the Owner.
2. Reservation of Property for Affordable Housing . The Owner covenants and agrees to reserve and restrict the Property for construction of the Project and, thereafter, reserve and restrict use and residential occupancy of the Qualifying Units by households who, at the time of initial occupancy of a Qualifying Unit and continuously thereafter (subject to the other provisions of this Regulatory Agreement), until the end of the Term, are members of a Qualifying Household. One (1) Three Bedroom Unit within the Project may be used as a Manager Unit at any given time and will not be subject to income or occupancy restrictions provided that no Qualifying Unit shall be used as a Manager Unit. Further, unless the City in its discretion permits a different use of the space, one office within the Project shall be provided at no cost or liability to the police department for sole use by the police department for any and all purposes deemed necessary or convenient by the police department in perpetuity . The police department shall either be the police department of the City or any police department that the City contracts with for police services.
3. Affordable Multi-Family Residential Rental Property Restrictive Covenant . The Owner covenants to and for the benefit of the City that the Owner shall develop, own, manage and operate, or cause the management and operation of, the Project to provide mul ti-family residential rental housing in the Qualifying Units only to Qualifying Households at an Affordable Rent. The Owner hereby confirms and remakes its covenant set forth in Section s 3 Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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6 and 4 of the Affordable Housing Agreement to develop the Property with the Project and such covenant is incorporated into this Regulatory Agreement in its entirety by this reference. The Owner will not knowingly permit any Qualifying Unit to be used on a transient basis and will not lease or rent any Qual ifying Unit fo r an initial period of more than twelve (12) months. No Qualifying Unit will, at any time, be leased or rented for use as a hotel, motel, time share, dormitory, fraternity house, sorority house, rooming house, hospital, nursing home, sanitary or rest home.
4. Continuous Operation Covenant. The Owner covenants to and for the benefit of the City to cause the Project to be continuously operated, in accordance with the other provisions of this Regulatory Agreement, throughout the Term.
5. Abandonment. The Owner shall not abandon or surrender the operation of all or any part of the Project during the Term, except due to material casualty or condemnation.
6. Rental of Qualifying Units . The Owner covenants that each Qualifying Unit shall be occupied or available for occupancy by a Qualifying Household at an Affordable Rent on a continuous basis throughout the Term, in accordance with the following tenant income level mix (unless modified with prior approval of the City):
6.1. No more than Fifteen (15) of the One Bedroom Un its may be occupied or available for occupancy by Qualifying Households that are Permanent Supportive Housing Households; and
6.2. Five (5) of the One Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 50% Households; and
6.3. Two (2) of the Two Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 30% Households; and
6.4. One (1) of the Two Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 50% Households; and
6.5. Thirteen (13) of the Two Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 60% Households; and
6.6. Two (2) of the Three Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 30% Households; and
6.7. Three (3) of the Three Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 60% Households; and
6.8. Two (2) of the Three Bedroom Units shall be occupied or available for occupanc y by Qualifying Households that are 70% Households; and
6.9. Six (6) of the Three Bedroom Units shall be occupied or available for occupancy by Qualifying Households that are 80% Households; and
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7 7. Affordable Rent. The monthly rent charged to a Qualifying Household for the occupancy of a Qualifying Unit shall never exceed an Affordable Rent for such Qualifying Unit set forth in Section 1.5.
7.1. Rent for Qualifying Units may be increased only once per calendar year, based on changes in Area Median Income; provided that the rent for each Qualifying Unit must never exceed an Affordable Rent for the Qualifying Unit as necessary to maintain the tenant income mix specified in Section 6.
7.2. Determination of Qualifying Household income shall be made by the Owner at the time of initial applicat ion by an individual or family for occupancy of a Qualifying Unit. At the time of initial application, the Owner shall require an applicant to complete the Income Certification Form and certify the accuracy of the information provided on suc h form. Each calendar year during the Term, Owner’s lease or occupancy agreement shall require each Qualifying Household occupying a Qualifying Unit to recertify the Qualifying Household’s income on the Income Certification Form. The Owner shall make a good faith effo rt to verify the accuracy of income information provided in any Income Certification Form by an applicant for occupancy of a Qualifying Unit or by a Qualifying Household occupying a Qualifying Unit, by taking one or more of the following step s, as reasonably required or indicated: (1) obtain an income tax return and copy of each W2 Wage and Earnings Statement for the most recently concluded income tax year; (2) conduct a credit reporting agency or similar search; (3) obtain an income verification form from the applicant’s or the Qualifying Household’s current employer(s); (4) obtain an income verification form from the United States Social Security Administration and/or the California Department of Social Services, if the applicant or the Qualifying Household receives assistance from either of such agencies; or (5) if the applicant or an adult member of a Qualifying Household is unemployed and has no such income tax return, obtain another form of independent verification. For purposes of this Section 7.2, the Owner may conclusively rely upon the evidence of the age of the occupant(s) of a Qualifying Unit as presented in a valid California Driver’s License, other form of identification issued by the State of California or the United States Gover nment, which i ncludes a date of birth. All such verification information shall only be obtained by the Owner after obtaining the applicant’s or the Qualifying Household’s written consent for the release of such information to the Owner .
Failure to consent in writing t o the release of such income verification information to the Owner may disqualify an applicant for occupancy of a Qualifying Unit or be grounds for termination of Qualifying Household’s occupancy of a Qualifying Unit.
7.3. The Qualifying Units are not specifica lly assigned to any qualifying income category (i.e., 30% Household, 40% Household , 50% Household , 60% Household, 70% Household or 80% Household). The restricted income level of each Qualifying Unit may change as Qualifying Units become vacant, a Qualifyi ng Household tenant’s income changes or other Qualifying Units are occupied by Qualifying Households. In all circumstances, though, the rent for each Qualifying Unit shall be an Affordable Rent for the Qualifying Unit as necessary to maintain the restricted income tenant mix required under Section 6. If, upon any recertification, the income of a previously Qualifying Household exceeds one hundred forty percent (140%) of the qualifying income for a Qualifying Household, then the Owner or Property Manager shall notify such household that its lease for its Qualifying Unit will not be renewed upon the expiration of its lease, unless the household again becomes a Qualifying Household upon Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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8 recertification prior to the expiration of its lease. In a ny event, if t he income category of a Qualifying Household upon recertification is different from the previous income of the Qualifying Household, the Owner or Property Manager shall rent the next available Unit to a Qualifying Household with an income level that will m aintain the tenant income level mix set forth in Section 6. To the extent the federal low -income housing tax credit requirements conflict with the requirements in this Section 7.3 relative to the continued occupancy by households that do not qualify as Qualifying Households, the federal low-income housing tax credit requirements shall apply in place of the provisions in this Section 7.3.
7.4. The Owner shall maintain on file all Income Certification Forms completed by applicants for occupancy of Qualifying Units and by Qualifying Households that occupied or are occupying Qualifying Units in accordance with Section 6 and shall provide copies of the rent roll and Income Certification Forms to the City for its review and approval within fifteen (15) d ays following Notice from the City to the Owner.
7.5. The Owner and each Qualifying Household occupying a Qualifying Unit shall permit the City to conduct inspections of the Property, the Project and each Qualifying Unit, from time-to-time, for purposes of verifying complian ce with this Regulatory Agreement, upon fifteen (15) days prior written notice from the City to the Owner.
7.6. The Owner shall submit its first Annual Report to the City on the April 30th immediately following the issuance of the final Certificate of Completion for the Project by the City. Thereafter, on each April 30 during the Term, the Owner shall submit an Annual Report to the City. The City shall maintain the confidentiality of the information contained in any Annual Report specifically relating to any particular Qualifying Household occupying a Qualifying Unit, to the extent reasonably allowed by Law, as determined by the City’s general or special counsel.
7.7. City warrants that it will provide Owner with reasonable notice of any unauthorized, unlawful discl osure of Income Certification Forms or related Tenant records provided to City by Owner in conformance with this Section 7 .7. Under such circumstances, City holds Owner harmless from any and all damages resulting from any such unauthorized and illegal dis closure contemplated by this Section 7.7 for Income Certification Forms or related Tenant records while in City’s possession. Owner warrants and acknowledges that City is a California public agency subject to State open government laws, incl uding the California Public Records Act (Gov. Code § 6250, et. seq.).
8. The Owner Covenant Regarding Lease of Qualifying Units . The Owner , for itself, its successors and assigns, covenants and agrees that, if any Qualifying Unit is rented or leased during the Term, the rental or lease of the Qualifying Unit shall be accomplished through a written lease agreement and all of the following restrictions shall apply:
8.1. A Qualifying Household shall be the record tenant and only occupant of the Qualifying Unit.
8.2. The lease for eac h Qualifying Unit shall be for an initial term of not more than twelve (12) months.
8.3. Each lease for a Qualifying Unit shall contain all of the following provisions:
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9 8.3.1. An agreement authorizing the Owner to immediately terminate the tenancy of a Qualifying Household occupying a Qualifying Unit, where one or more members of that Qualifying Household misrepresented any fact material to the qualification of such household as a Qualifying Household;
8.3.2. An agreement providing that each Qualifying Household occupying a Qualifying Unit shall be subject to annual certification or recertification of income as a condition to continued occupancy of the Qualifying Unit;
8.3.3. An agreement providing that each Qualifying Household occupying a Qualifying Unit may be subject to rental in creases in accordance with this Regulatory Agreement; and
8.3.4. Each tenant of a Qualifying Unit shall be required to execute a “crime free addendum” as part of the rental agreement or lease.
8.3.5. An agreement providing that the Owner will not discriminate on the b asis of race, color, creed, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status , source of income, disability, genetic information or receipt of public assistance or hou sing assistance in connection with rental of a Qualifying Unit, or in connection with the employment or application for employment of persons for operation and management of the Project, and all contracts, applications and leases entered into for such purposes shall contain similar non-discrimination clauses to such effect.
8.3.6. Each lease shall contain a n otice that the City and its employees and authorized agents have the right to conduct code compliance and/or code enforcement inspections of the Project and t he units, as provided more specifically in Section 11.4 of this Regulatory Agreement.
8.4. The Owner shall not terminate the tenancy or refuse to renew the lease or rental agreement of a Qualifying Household except for: (i) serious or repeated vio lations of the terms and conditions of the lease; (ii) because the previously Qualifying Household is no longer a Qualifying Household; (iii) for violation of applicable Federal, State, or local law; or (iv) for other good cause. The Owner shall follow all applicable l aws in connection with termination of the tenancy of a Qualifying Household or a refusal to renew the lease or rental agreement of a Qualifying Household.
8.5. Tenant Selection Policies and Criteria . The Owner shall adopt written tenant selection policies and criteria that:
8.5.1. are consistent with the purpose of providing affordable rental housing for Qualifying Households at an Affordable Rent;
8.5.2. are reasonably related to tenant eligibility and ability to perform the obligations of the lease for a Qualifying Unit;
8.5.3. subject to applicable fair housing laws, give reasonable preference and consideration to the housing needs of households residing in the City of Lake Forest, including Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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10 those that are involuntarily displaced by natural disaster, or by activit ies of the City, including but not limited to priority placement on a written waiting list of available units;
8.5.4. subject to applicable fair housing laws, give reasonable preference and consideration to the housing needs of households residing in , employed in, or offered employment in the City of Lake Forest , including but not limited to priority placement on a written waiting list of available units;
8.5.5. provide for the selection of tenants from a written waiting list in the chronological order of their applicati on subject to Sections 8.5.3 and 8.5.4 , insofar as is practicable;
8.5.6. give prompt written notice to any rejected applicant of the grounds for rejection;
8.5.7. provide for all of the Qualifying Units to be available for occupancy on a continuous basis to Qualifying Households at an Affordable Rent; and
8.5.8. do not give preference to any particular class or group of persons in leasing or renting the Qualifying Units, except as provided in Section s 8.5.3 and 8.5.4 and to the extent that a tenant must be a Qualifying Household.
9. Non-Discrimination. All units in the Project shall be available at an Affordable Rent for occupancy on a continuous basis to Qualified Households. Except as provided in Section s 8.5.3 and 8.5.4, the Owner shall not give preference to any particular class or group of persons in renting the units in the Project. There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, gender, gender identity, gender expression, sexual o rientation, marital status, national origin, ancestry, familial status, source of income, disability, or genetic information in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any Unit. Neither the Owner nor any person claiming under or t hrough the Owner , shall establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of any U nit or in connection with the employment of persons for the operation and management of any Unit, the Project or the Property. All deeds, leases or contracts made or entered into by the Owner as to the units, the Project or the Property or any portion thereof, shall contain covenants prohibiting discrimination, as prescribed by this Regulatory Agreement. The Owner shall include a statement in all advertisements, notices and signs for the availability of units in the Project for rent to the effect that the Owner is an Equal Housing Opportunity Provider.
10. Equal Housing Notice . Provide for a statement in all advertisements, notices and signs for the availability of Qualifying Units for lease or rent to the effect that the Owner is an equal housing opportunity provider, and include an equal housing opportunity logotype in all notices, signs and advertisements in print media for the Qualifying Units.
11. Development and Management of the Project.
11.1. Management of Project ; Property Manager . Owner shall manage or cause the Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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11 Project, and all appurtenances thereto that are a part of the Project, to be managed in a prudent and business -like manner, consistent with good property management standards for other comparable first quality, well -managed affordable rental housing projects in the County of Orange. Owner may contract with a property management company or property manager, (a “Property Manager”) to operate and maintain the Project; provided, however, the selection and hiring of the Property Manager (and each successor or assignee), including any Affiliate, is and shall be subject to prior written approval of the City Manager (or designee) in his or her discretion. National Community Renaissance of California shall be deemed to be an approved Property Manager. The Property Manager sh all manage the Project in accordance with the definitions of Affordable Rent , the tenant selection requirements , and the definitions relating to income contained herein and in the Affordable Housing Agreement. The Property Manager shall be r esponsible for management of the Project, including, without limitation, the selection of Qualified Households, certification and recertification of household size, income, gender and the age of the head of household and relation of head of household to the household, o f all Qualified Households, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. The City shall have bear no responsibility for the management o r operation of the Project or the Property. Owner shall conduct due diligence and background evaluation of any potential third -party property manager or property management company to evaluate experience, references, credit worthiness, and related qualifications as a p roperty manager. Any proposed property manager shall have significant and relevant prior experience with affordable housing projects and properties comparable to the Project and the references and credit record of such property manager/company shall be in vestigated (or caused to be investigated) by Owner prior to submitting the name and qualifications of such proposed property manager to the City Manager for review and approval. A complete and true copy of the results of such background evaluation shall be provided to the City Manager. Approval of a Property Manager by the City Manager shall not be unreasonably delayed but shall be in his/her sole reasonable discretion, and the City Manager shall use good faith efforts to respond as promptly as practicable in order to facilitate effective and ongoing property management of the Project on either a temporary or permanent basis. The replacement of a Property Manager by Owner and/or the selection by Owner of any new or different Property Manager during the Term shall also be subject to the foregoing requirements, except in the case of temporary management by a lender or limited partner of Owner, which shall be immediately submitted to City for approval and will not last longer than 30 days.
11.2. Property Management Plan. Within the time set forth in the Affordable Housing Agreement, Owner shall prepare and submit to the City Manager for review and approval, a management plan for the Project which must include a detailed plan and strategy for long term marketing, operation, maintenance, repair and security of the Project, inclusive of social services for the residents of the units, on -site parking policies, and the method of selection of tenants, rules and regulations for tenants, and other rental policies for the Project (“Property Management Plan”). The City Manager shall review and shall act reasonably to approve or disapprove the Property Management Plan within a reasonable time. The approval of the Property Management Plan is a necessary condition precedent to approval by City of Project building plans.
Subsequent to approval of the Property Management Plan by the City Manager the ongoing management and operation of the Project shall be in compliance with the approved Property Management Plan. During the Term, Borrower and its Property Manager may from time to time Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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12 submit to the City Manager proposed amendments to the Property Management Plan, the implementation of which shall also be subject to the prior written approval of the City Manager.
11.3. Gross Mismanagem ent. During the Term, and in the event of “Gross Mismanagement” (as defined below) of the Project, the City Manager and/or the City shall have and retain the authority to direct and require any condition(s), acts, or inactions of Gross Mismanagement to ce ase and/or be corrected immediately, and further to direct and require the immediate removal of the Property Manager and replacement with a new qualified and approved Property Manager, if such condition(s) is/are not ceased and/or corrected after expiratio n of thirty (30) days from the date of written notice from the City Manager. If Owner or Property Manager has commenced to cure such Gross Mismanagement condition(s) on or before the 20th day from the date of written notice (with evidence of such submitted to the City Manager), but has failed to complete such cure by the 30th day (or such longer period if the cure cannot reasonably be accomplished in thirty (30) days as reasonably determined by the non -defaulting party), then Owner and its Property Manager shall have an additional ten (10) days to complete the cure of Gross Mismanagement condition(s). In no event shall any condition of Gross Mismanagement continue uncured for a period exceeding forty -five (45) days from the date of the initial written notice of such condition(s), except that the conditions described in subdivisions
11.3.4 and 11.3.5 below may exist for up to, but no longer than, seventy -five (75) days without triggering the City’s right to remove the Property Manager as described in the imm ediately following sentence as long as Owner is diligently working to cure such conditions of Gross Mismanagement. If such condition(s) do persist beyond such period, the City Manager shall have the sole and absolute right to immediately and without furth er notice to Owner (or to Property Manager or any other person/entity) to remove the Property Manager and replace the Property Manager with a new property manager of the City Manager’s selection at the sole cost and expense of Owner. If Owner takes steps to select a new Property Manager that selection is subject to the requirements set forth above for selection of a Property Manager.
For purposes of this Regulatory Agreement, the term “ Gross Mismanagement ” shall mean management of the Projec t in a manner which violates the terms and/or intention of this Agreement to operate a first quality affordable housing complex, and shall include, but is not limited to, any one or more of the following:
11.3.1. Leasing of a unit (other than one Manager’s Unit) to tenants who exceed or households that do not qualify under the Qualifying Unit thresholds (except if such action was based on fraudulent documents submitted by such tenant in the course of application for occupancy of a unit, which could not be discover ed by the Prop erty Manager initially through the exercise of ordinary and customary due diligence);
11.3.2. Allowing tenants to exceed the prescribed occupancy levels without taking immediate action to stop such overcrowding consistent with applicable laws;
11.3.3. Under-funding required reserve accounts;
11.3.4. Failing to timely maintain the Project in accordance with the Property Management Plan;
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13 11.3.5. Failing to submit timely and/or complete annual reports to the City as required herein;
11.3.6. Fraud or embezzlement of Project funds, including without limitation funds in the reserve accounts;
11.3.7. Failing to fully cooperate with the Orange County Sheriff’s Department (the entity currently providing law enforcement services to the City) or other local law enforcement agency(ies) with jurisdiction over the Pr oject, in maintaining a crime - free environment within the Project;
11.3.8. Failing to fully cooperate with the Orange County Fire Authority or other local public safety agency(ies) with jurisdiction over the Project, in maintaining a safe and accessible environment within the Project; and
11.3.9. Failing to fully cooperate with local health and safety enforcement agency(ies) with jurisdiction over the Project, in maintaining a decent, safe and sanitary environment within the Project.
Notwithstanding the requirements of t he Property Manager to correct any condition of Gross Mismanagement as described above, Owner is obligated and shall use its reasonable best efforts to correct any defects in property management or operations at the earliest feasible time and , if necessary, to replace the Property Manager as provided above. Owner shall include advisement and provisions of the foregoing requirements and requirements of this Agreement within any contract between Owner and its Property Manager for the Project.
11.4. Code Enforceme nt. Owner acknowledges and agrees that the City, and its employees and authorized agents, shall have the right to conduct code compliance and/or code enforcement inspections of the Project and the units, both exterior and interior, at reason able times and upon reasonable notice (not less than forty -eight (48) hours’ prior notice, except in an emergency) to Owner and/or an individual tenant. If such notice is provided by City representative(s) to Owner, then Owner (or its Property Manager) shall immediatel y and directly advise any affected tenant of such upcoming inspection and cause access to the area(s) and/or unit(s) at the Project to be made available and open for inspection. Owner shall include express advisement of such inspection right s within the l ease/rental agreements for each unit in the Project in order for each and every tenant and tenant household to be aware of this inspection right.
11.5. Onsite Services. Owner shall provide a variety of social services at the Project.
Owner shall use its best e fforts to create a comprehensive social service program that is targeted to the needs of the residents of the Project which, in addition to including all of the services listed in Owner’s application for Tax Credits, may include the following services: after school programs of an ongoing nature for school age children, and the availability of a bona fide services coordinator or social worker to the tenants. Owner shall ensure that all personnel providing or coordinating all social services shall be adequat ely trained and counseled. Within thirty (30) days after Owner has initially leased fifty percent (50%) of the units, Owner shall provide City with a list and summary of the social services Owner will provide at the Project.
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14 Owner shall pro mptly notify t he City, in writing, whenever Owner anticipates making any changes to Owner’s social services program, which notification shall set forth, with specificity, the anticipated changes. Borrower shall also provide to the City, an annual an Economic Mobility R eport (“Report”). This Report will summarize program activities designed to encourage self -sufficiency and promotion to market -rate housing. The Report will include information regarding the programs offered, the attendance, and number of r esidents that successfully transitioned to market-rate housing.
11.6. Insurance.
11.6.1. Required Insurance. Owner shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to City, during the entire term of this Agreement, duplicate originals o r appropriate endorsements of commercial general liability insurance policies in the amount of at least Two Million Dollars ($2,000,000) combined single limit, naming City and its officers, employees, and agents as additional insureds or co -insureds.
Owner shall also furnish or cause to be furnished to City evidence of builder’s risk coverage written on a completed value basis in an amount equal to the full replacement cost of the improvements with coverage available on the so -called non-reporting “all ris k” form of policy, including coverage against collapse, fire, and water damage, with such insurance to be in such amounts and form and written by such companies as shall be approved by City. Such policy shall name City as a loss payee. The foregoing insurance policies:
11.6.1.1. shall be primary insurance and not contributory with any other insurance which City may have;
11.6.1.2. shall contain no special limitations on the scope of protection afforded to City and its officers, employees, agents, and representatives;
11.6.1.3. shall be “date of occurrence” and not “claims made” insurance;
11.6.1.4. shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability;
11.6.1.5. shall provide that the policy will not be cancell ed by the insurer or Borrower unless there is a minimum of thirty (30) days prior written notice to City;
11.6.1.6. shall be written by a good and solvent insurer admitted in California and registered with the California State Department of Insurance; and
11.6.1.7. shall be e ndorsed to state that any failure to comply with the reporting provisions of the policies shall not affect coverage provided to City.
Owner shall also furnish or cause to be furnished to City evidence reasonably satisfactory to City that Owner’s Contractor carries workers’ compensation insurance as required by law.
Owner agrees that the provisions of this Section 11.5.1 shall not be construed as limiting in any way the extent to which Owner may be held responsible for the payment of damages to any Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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15 persons or property resulting from Owner’s activities or the activities of any person or persons for which Owner is otherwise responsible. No later than five (5) days after the Effective Date, Owner shall provide evidence of the above -required insurance (such as C ertificates of Insurance of appropriate insurance binders) and obtain approval thereof from City, which approval shall not be unreasonably withheld or delayed and may be waived in City’s sole and absolute discretion. Evidence of builder’s risk coverage ma y be provided after Owner receives all necessary construction financing.
11.6.2. Deliveries to the City. The Owner shall deliver to the City evidence of all insurance policies required by this Regulatory Agreement. No later than three (3) days bef ore any insurance required by this Regulatory Agreement expires, is cancelled or its liability limits are reduced or exhausted, the Owner shall deliver to the City evidence of the Owner ’s maintenance of all insurance this Regulatory Agreement requires. Each insurance p olicy required by this Regulatory Agreement shall be endorsed to state that coverage shall not be cancelled, suspended, voided, reduced in coverage or in limits, except after thirty (30) calendar days’ advance written notice of such action ha s been given t o the City by certified mail, return receipt requested; provided that if a thirty (30) days’ notice of cancellation endorsement is not available the Owner shall notify the City of this unavailability in writing and shall forward any notice of cancellation to the City within two (2) business days from date of receipt by the Owner; and further provided, however, that only ten (10) days’ advance written notice shall be required for any such action arising from non-payment of the premium for the insurance. Phrases such as “endeavor to” and “but failure to mail such Notice shall impose no obligation or liability of any kind upon the company” shall not be included, to the extent commercially available, in the cancellation wording of any certificates or policies o f insurance applicable to the City Parties pursuant to this Regulatory Agreement.
11.6.3. Waiver of Certain Claims . The Owner shall cause each insurance carrier providing insurance coverage under this Regulatory Agreement to endorse their applicable policy(ies) with a Waiver of Subrogation with respect to the City Parties, if not already in the policy. To the extent that the Owner obtains insurance with a Waiver of Subrogation, the parties release each other, and their respective authorized representatives, from any claims for damage to any person or property to the extent such claims are paid by such insurance policies obtained pursuant to and in satisfaction of the provisions of this Regulatory Agreement.
11.6.4. No Claims Made Coverage . None of the insur ance coverage required under this Regulatory Agreement may be written on a claims-made basis.
11.6.5. Fully Paid and Non-Assessable. All insurance obtained and maintained by the Owner pursuant to this Section 11.6 shall be fully paid for and non -assessable. However, such insurance policies may be subject to insurer audits.
11.6.6. City Option to Obtain Coverage . During the continuance of an Event of Default arising from the failure of the Owner to carry any insurance required by this Regulatory Agreement, the City may, at its option, purchase any such required insurance coverage and the City shall be entitled to immediate payment from the Owner of any premiums and associated reasonable costs paid by the City for such insurance coverage. Any amount becoming due and payable to the City under this Section 11.6.6 that is not paid within fifteen (15) calendar days Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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16 after written demand from the City for payment of such amount, within an explanation of the amounts demanded, will bear interest from the date of the demand at the rate of eight percent (8%) per annum or the maximum interest rate allowed by applicable law, whichever is less. Any election by the City to purchase or not to purchase insurance otherwise required by the terms of this Regulatory Agreement to be carried by the Owner shall not relieve the Owner of its obligation to obtain and maintain any insurance coverage required by this Regulatory Agreement.
11.6.7. Deductibles and Self-Insured Retentions. Any deductibles or self -insured retentions under insurance policies requ ired by this R egulatory Agreement shall be declared to , and reasonably approved by, the City. The Owner shall pay all such deductibles or self -insured retentions regarding the City Parties or, alternatively, the insurer under each insurance policy required by this Sect ion 11.2 shall eliminate such deductibles or self -insured retentions with respect to the City Parties.
11.6.8. No Separate Insurance . The Owner shall not carry separate or additional insurance concurrent in form or contributing in the event of loss with that requ ired under this Regulatory Agreement, unless the City is made an additional insured thereon, as required by this Regulatory Agreement.
11.6.9. Insurance Independent of Indemnification . The Owner’s Liability Insurance policy shall contain contractual liability cov erage for the Owner’s indemnity obligations under this Regulatory Agreement. The Owner’s obtaining or failure to obtain such contractual liability coverage shall not relieve the Owner from nor satisfy any indemnity obligation of the Owner un der this Regul atory Agreement. The insurance requirements of this Regulatory Agreement are independent of the Owner indemnification and other obligations under this Regulatory Agreement and shall not be construed or interpreted in any way to satisfy, restrict, limit, or modify the Owner’s indemnification or other obligations or to limit the Owner’s liability under this Regulatory Agreement, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the cov erage; nor shall the provision of such insurance preclude the City from taking such other actions as are available to it under any other provision of this Regulatory Agreement or otherwise at law or in equity.
11.6.10. Nature of Insurance . The policies of insuranc e required by this Regulatory Agreement shall be issued by carriers that: (a) are listed in the current “Best’s Key Rating Guide —Property/Casualty—United States & Canada” publication (or its equivalent, if such publication ceases to be publis hed) with a minimum financial strength rating of “A -” and a minimum financial size category of “XI” (exception may be made for the California Compensation Insurance Fund when not specifically rated); and (b) are authorized to do business in California. The Owner may provide any insurance under a “blanket” or “umbrella” insurance policy, provided that: (i) such policy or a certificate of such policy shall specify the amount(s) of the total insurance allocated to the Property and the Project, which amount(s) shall equal o r exceed the amount(s) required by this Regulatory Agreement; and (ii) such policy otherwise complies with this Regulatory Agreement.
12. Maintenance of the Project . The Owner , for itself, its successors and assigns, hereby covenants and agrees that the exter ior areas of the Project which are subject to public view (e.g.:
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17 all improvements, paving, walkways, landscaping, and ornamentation) shall be maintained in good repair and in a neat, clean and orderly condition, ordinary wear and tear excepte d. In the event that at any time during the Term, there is an occurrence of an adverse condition on any area of the Project which is subject to public view in contravention of the general maintenance standard described above (the “Maintenance Deficiency”), then the City shall notify the Owner in writing of the Maintenance Deficiency and give the Owner thirty (30) calendar days from the date of such notice to cure the Maintenance Deficiency as identified in the notice. “Maintenance Deficiency” includes, wi thout limitation, the following inadequate or non -conforming property maintenance conditions and/or breaches of residential property use restrictions: (i) failure to properly maintain the windows, structural elements, and painted exterior surface areas of the units in a clean and presentable manner; (ii) failure to keep the common areas of the Project free of accumulated debris, appliances, inoperable motor vehicles or motor vehicle parts, or free of storage of lumber, building materials or equipment not re gularly in use on the Property; (iii) failure to regularly maintain, replace and renew the landscaping in a reasonable condition free of weed and debris; and (iv) the use of garage areas on the Project for purposes other than the parking of motor vehicles and the storag e of personal possessions and mechanical equipment of persons residing in the Project.
12.1. In the event the Owner fails to cure or commence to cure the Maintenance Deficiency within the time allowed, the City may thereafter conduct a public heari ng following transmittal of written notice thereof to the Owner ten (10) calendar days prior to the scheduled date of such public hearing in order to verify whether a Maintenance Deficiency exists and whether the Owner has failed to comply with the provision of this Sec tion 12. If, upon the conclusion of a public hearing, the City makes a finding that a Maintenance Deficiency exists and that there appears to be non -compliance with the general maintenance standard, as described above, then the City shall have the right t o enter the Project (exterior areas of the Project which are subject to public view only) and perform all acts necessary to cure the Maintenance Deficiency, or to take other action at law or equity that the City may then have to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the City for the abatement of a Maintenance Deficiency as authorized by this Section 12.1 shall become a lien on the Project. If the amount of the lien is not paid within thirty (30) calendar days after wr itten demand for payment by the City to the Owner, the City shall have the right to enforce the lien in the manner as provided in Section 12.3.
12.2. Graffiti which is visible from any public right -of-way which is adjacent or contiguous to the Project shall be removed by the Owner from any exterior surface of a structure or improvement on the Project by either painting over the evidence of such vandalism with a paint which has been color -matched to the surface on which the paint is applied, or graff iti may be removed with solvents, detergents or water as appropriate. In the event that graffiti is placed on the Project (exterior areas only) and such graffiti is visible from an adjacent or contiguous public right -of-way and thereafter such graffiti is not removed w ithin seventy -two (72) hours following the time of its application, or the Owner ’s actual knowledge of its existence, whichever occurs later; then in such event and without notice to the Owner, the City shall have the right to enter the Proje ct and remove the graffiti. Notwithstanding any provision of the Regulatory Agreement to the contrary, any sum expended by the City for the removal of graffiti from the Project as authorized by this Section 12.2 shall become a lien on the Project. If the amount of the lien is not paid within thirty (30) calendar days after written demand for payment Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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18 by the City to the Owner , the City shall have the right to enforce its lien in the manner as provided in Section 12.3.
12.3. The parties hereto further mutually un derstand and agree that the rights conferred upon the City under this Section 12 expressly include the power to establish and enforce a lien or other encumbrance against the Property in the manner provided under California Civil Code Sections 2924, 2924b and 2924c, as such sections may be amended or superseded, in the amount as reasonably necessary to restore the Project to the maintenance standards required under this Section 12, including attorneys ’ fees and costs of the City associated with the abatement of the Maintenance Deficiency or removal of graffiti and the collection of the costs of the City in connection with such action. In any legal proceeding for enforcing such a lien against the Project, the prevailing party shall be entitled to recover its attorneys’ fee s and costs of suit. The provisions of this Section 12 shall be a covenant running with the land for the Term and shall be enforceable by the City in its discretion, cumulative with any other rights or powers granted to the City under applicable law. Not hing in the foregoing provisions of this Section 12 shall be deemed to preclude the Owner from making any alterations, additions, or other changes to any structure or improvement or landscaping on the Project, provided that such changes comply with the zoning and development regulations of the City and other applicable law.
12.4. Capital Replacement Reserve Account. The Owner shall establish an account for the payment of repair and replacement of capital items ( the “Capital Replacement Reserve Account”) in an in itial amount as required by the Institutional Lenders for the Project or the investor limited partner of the Owner . Each year thereafter, the Owner shall deposit into the Capital Reserve Replacement Account additional amounts as required by the Institution al Lenders for the Project or the investor limited partner of the Owner, but not less than $ 500 per Unit per year for any MHSA funded units through the Orange County Housing Finance Trust, and not less than $250 per Unit per year for all other units.
12.4.1. Capital Repairs and Replacements. Capital repairs and replacements shall include, but not be limited to, the following: wet and dry utilities; roof repair and replacement as necessary; repair and replacement of boilers and the major operating components thereo f; stucco repair and replacement; exterior painting; replacement of carpeting and vinyl or other hard surface flooring; replacement of drapes; replacement of dishwashers, garbage disposals and other interior appliances; repair and replacement of heating, v entilating and air conditioning systems, equipment and components ; and installation of solar panels. All of the foregoing and other similar expenditures on the Project shall be considered to be qualifying capital repair and replacement expenses. Interior painting and servicing, repair or replacement of interior hardware shall not be considered to be a capital repair, but shall be ordinary operating expenses for the Project. The Owner shall withdraw funds from the Capital Replacement Reserve Account to pay such capital repair and replacement expenses as the Owner may deem necessary for the purposes of meeting the maintenance and replacement obligations described herein.
12.4.2. Insured Depository. The Capital Replacement Reserve Account shall be maintained in a depository insured by an agency of the federal government.
12.4.3. Documentation. Annually, or more frequently at the City ’s, the Owner shall document the level of capital repairs and replacements for the preceding period. The Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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19 Owner shall maintain and shall pro vide as requested documentation showing the quantity and price of items purchased, price of materials and the cost of contracted labor or other services incurred in connection with such capital repair and replacement, and such other items as the City may reasonably request.
12.4.4. Withdrawals from Reserve Account. On an annual basis, the Owner shall notify the City of the anticipated cash requirements which will need to be withdrawn from the Capital Replacement Reserve Account. Amounts so budgete d and approved by the City may be withdrawn by the Owner from the indicated Capital Replacement Reserve Account without further the City approval. Other withdrawals for unbudgeted, unanticipated or emergency Project expenditures may be withdrawn by the Owner without prior the City approval, but the Owner shall notify the City in writing within ten (10) calendar days after withdrawal. All amounts so withdrawn by the Owner shall be expended on the Project and in accordance with this Regulatory Agreement. W ithdrawals in excess of Twenty-Five Thousand Dollars ($25,000) in any one calendar year shall be pre -approved by the City in its reasonable discretion, subject to the rights of any Senior Lenders or the investor limited partner of the Owner.
12.4.5. Interest Earned on Funds in the Capital Replacement Reserve Account .
Any interest or other earnings from sums deposited into the Capital Replacement Reserve Account shall be retained in and added to the balance in said account.
12.4.6. Capital Needs Assessment. If requested in writing by the City, the Owner shall deliver to the City , for the City ’s reasonable review and approval, a capital needs assessment (the “CNA”) no more often than every ten (10) years after the date of the Certificate of Completion for the Project. The CNA shall incl ude an analysis of the Owner ’s actual expenditures for capital needs compared to the most recently approved CNA, the Owner ’s original operating budget and its then -current operating budget. Each CNA shall include a ten (10) year capital needs assessment or analysis of replacement reserve requirements prepared by a qualified third party in accordance with reasonable and customary standards for similar residential rental projects.
12.4.7. Displacement of Residents and Relocation . The Owner shall make reasonable best efforts to conduct capital repairs and replacements and ordinary repair and maintenance (collectively, the “Repairs”) in good faith and in a manner that does not result in the displacement of any of the residents of the Units. If any of th e Owner’s acti ons to conduct Repairs result in displacement of any of the Units’ residents, the Owner shall notify the City in writing, prior to conducting such Repairs, of the identities of the residents to be displaced, the Units they will be displaced from, and the e stimated length of time such residents shall be displaced. If the displacement of the residents triggers relocation obligations, the Owner shall be responsible, at its sole cost and expense, for any and all such relocation obligations and re lated expenses. The Owner shall comply with all applicable federal, state and local laws, rules and regulations regarding such relocation obligations and related expenses, including any relocation requirements set forth by the City, includin g as set forth in the Affordable Housing Agreement .
The Owner shall defend, indemnify and hold harmless the City Parties from and against all liability for any relocation obligations and related expenses attributable to any Repairs.
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20 13. Covenants to Run With the Land . The Owner and the City hereby declare their specific intent that the covenants, reservations and restrictions set forth herein are part of a plan for the promotion and preservation of affordable housing within the territorial jurisdiction(s) of the City and that each s hall be deemed covenants running with the land and shall pass to and be binding upon the Property and each successor-in-interest of the Owner in the Property for the Term. The Owner hereby expressly assumes the duty and obligation to perform each of the covenants and to honor each of the reservations and restrictions set forth in this Regulatory Agreement. Each and every contract, deed or other instrument hereafter executed covering or conveying the Property or any interest therein shall conclusively be h eld to have been executed, delivered and accepted subject to such covenants, reservations, and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instrument.
14. Burden and Benefit. The City and the Owner hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Owner’s legal interest in the Property is affected by the affordable dwelling use and occupancy co venants hereunder. The City and the Owner hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Property by the intended b eneficiaries o f such covenants, reservations and restrictions, and by furthering the affordable housing goals and objectives of the City and in order to make the Property available for acquisition by the Owner.
15. Defaults.
15.1. Events of Default . The occurrence of any of the following is a default and shall constitute a material breach of this Regulatory Agreement and, if not corrected, cured or remedied in the time period set forth in Section 15.2, shall constitute an “ Event of Default ” hereunder:
15.1.1. failure of the Owner or any person under its direction or control to comply with or perform when due any material term, obligation, covenant or condition contained in this Regulatory Agreement;
15.1.2. any warranty, representation or statement made or furnished to the City by the Owner under this Regulatory Agreement that is false or misleading in any material respect either now or at the time made or furnished;
15.1.3. the dissolution or termination of the existence of the Owner as an ongoing business, insolvency, appointment of a rece iver for any p art of the Property of the Owner, any assignment for the benefit of creditors, any type of creditor workout or the commencement of any proceeding under any bankruptcy or insolvency laws by or against the Owner; or
15.1.4. an Event of Default pursuant to the Afford able Housing Agreement (until the termination thereof).
15.2. Notice of Default. The City shall give written notice of default to the Owner, in accordance with Section 22, stating that such notice is a “ Notice of Default ”, specifying the default c omplained of b y the City and requiring the default to be remedied within thirty (30) calendar days of the date of the Notice of Default. Except as required to protect against further Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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21 material damage, the City may not institute legal proceedings against the Owner until thirty (30) calendar days after providing the Notice of Default. Failure or delay in giving a Notice of Default shall not constitute a waiver of any default, nor shall it change the time of occurrence of the default. If the default specified in the Notice of Default is such that it is not reasonably capable of being cured within thirty (30) calendar days, and if the Owner initiates corrective action within said thirty (30) calendar day period and diligently works to effect a cure as soon as possible, then the Owner may have such additional time as authorized in writing by the City as reasonably necessary to complete the cure of the default prior to exercise of any other remedy for the occurrence of an Event of Default. Such authorization for additional time to cure shall not be unreasonably withheld, conditioned or delayed. The City shall give the investor limited partner or limited liability company in the Owner the following notice and cure rights:
15.2.1. The City will give the limited partner or limited liabil ity company a copy of any Notice (at the limited partner's address provided in a notice by the Owner to the City) that the City gives to the Owner under this Regulatory Agreement, provided that Owner has provided the address and contact infor mation for the investor limited partner or limited liability company in writing to the City;
15.2.2. The City will give the limited partner or limited liability company thirty (30) days after the limited partner's receipt of such Notice to cure a non -payment of any sum due under this Regulatory Agreement;
15.2.3. The City will give the limited partner or limited liability company sixty (60) days after the limited partner's or limited liability company’s receipt of such Notice to cure any other default under this Regulatory Agreement;
15.2.4. If a non -monetary default is incapable of being cured within sixty (60) days, the City will give the limited partner or limited liability company an additional ninety (90) days to cure such default provided the limited partner or limited liability company has commenced to cure such default and is diligently proceeding to cure such default through the end of such period; and
15.2.5. If the limited partner or limited liability company makes any such payment or otherwise cures such default, the City will accept such action as curing such default as if such payment or cure were made by the Owner.
If the Owner fails to take corrective action relating to a default within thirty (30) calendar days following the date of Notice of Default (or to complete the cure within the additional as may be authorized by the City or set forth above for the limited partner of the Owner ), an Event of Default shall be deemed to have occurred.
15.3. Inaction Not a Waiver of Default . Any failure or delays by the City in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by the City in asserting any of its rights and remedies shall not deprive the City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.
16. Remedies. Upon the occurrence of an Event of Default, the City shall, in addition to the Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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22 remedial provisions of Section 12 as related to a Maintenance Deficiency at the Property, be entitled to seek any appropriate remedy or damages by initiating legal proceedings as follows: (i) by mandamus or other suit, action or proceeding at law or in equity, to require the Owner to perform its obligations and cove nants hereunder, or enjoin any acts or things which may be unlawful or in violation of the rights of the City; or (ii) by other action at law or in equity as necessary or convenient to enforce the obligations, covenants and Agreements of the Owner to the City.
16.1. Rights and Remedies are Cumulative . The rights and remedies of the City as set forth in this Section 16 are cumulative and the exercise by the City of one or more of such rights or remedies shall not preclude the exercise by it, at the same or differ ent times, of any other rights or remedies for the same default or any other default by the Owner.
16.2. Enforcement by Third Parties . No third party shall have any right or power to enforce any provision of this Regulatory Agreement on behalf of the City or to compel the City to enforce any provision of this Regulatory Agreement against the Owner or the Project.
17. Governing Law. This Regulatory Agreement shall be governed by the laws of the State of California and applicable federal laws, without regard to its conflicts of laws principles.
18. Amendment. This Regulatory Agreement may be amended after its recordation only by a written instrument executed by the Owner and the City.
19. Attorneys’ Fees. In the event that a party to this Regulatory Agreement brings an acti on to enforce any condition or covenant, representation or warranty in this Regulatory Agreement or otherwise arising out of this Regulatory Agreement, the prevailing party(ies) in such action shall be entitled to recover from the other party reasonable at torneys’ fees to be fixed by the court in which a judgment is entered, as well as the costs of such suit for the purposes of this Section 19, the words “reasonable attorneys’ fees,” in the case of the City, shall include the salaries, costs and overhead of the City Attorney as well as any other legal counsel hired by the City in such action, as allocated on an hourly basis.
20. Severability. If any provision of this Regulatory Agreement shall be declared invalid, inoperative or unenforceable by a final judgmen t or decree of a court of competent jurisdiction such invalidity or unenforceability of such provision shall not affect the remaining parts of this Regulatory Agreement which are hereby declared by the parties to be severable from any other part which is found by a court to be invalid or unenforceable.
21. Time is of the Essence . For each provision of this Regulatory Agreement which states a specific amount of time within which the requirements thereof are to be satisfied, time shall be deemed to be of the essence.
Notices, Demands and Communications Between the Parties . Any and all notices submit ted by any party to another party pursuant to or as required by this Regulatory Agreement shall be dispatched by personally delivery; delivery through t he United Stat es mail, by registered or certified mail, postage prepaid; by means of prepaid overnight delivery service; or by email.
Notices shall be deemed given upon receipt in the case of personal delivery, two days after deposit in the mail, or the next business day in the case of email or overnight delivery. Such Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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23 written notices, demands, and communications shall be sent in the same manner to such other addresses as any Party may from time to time designate in writing . Rejection, other refusal to accept or the inability to deliver any notice because of a changed address of which no notice was given or other action by a person or entity to whom notice is sent, shall be deemed receipt of the notice. Notices delivered electronically after 5:00 p.m. on a business day , or on a weekend or holiday, shall be deemed delivered at 8:00 a.m. on the first successive business day.
The following are the authorized a ddresses for the submission of n otices to the parties, as of the date of this Regulatory Agreement:
To the Owner: NAME
ADDRESS
ADDRESS
Facsimile: (###) ###-####
Email: EMAIL
With copies to: NAME
ADDRESS
ADDRESS
Facsimile: (###) ###-####
Email: EMAIL
With copies to: NAME
ADDRESS
ADDRESS
Facsimile: (###) ###-####
Email: EMAIL
With copies to: NAME
ADDRESS
ADDRESS
Facsimile: (###) ###-####
Email: EMAIL
To the City: City of Lake Forest
100 Civic Center Drive
Lake Forest, CA 92630
Attention: Debra Rose, City Manager
Facsimile: (949) 461-3410
Email: [email protected]
With copies to: Best Best & Krieger LLP
18101 Von Karman Avenue, STE 1000
Irvine, CA 92612
Attention: Elizabeth Hull, Esq.
Facsimile: (949) 263-2608
Email: [email protected]
22. Force Majeure . Except as otherwise set forth in this Regulatory Agreement, this Regulatory Agreement and the obligation s of any of the parties hereunder shall toll if such party is prevented or delayed from performance by reason of any cause beyond the reasonable control Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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24 of such party including, but not limited to, acts of war, emergency, terrorism, bio -terrorism, governmental preemption in connection with a declared state or national emergency, disease (including, without limitation, delays arising out of the spread of COVID -19, such as, without limitation, delays in the responsiveness of, or the unavailability of, governm ental authorities to grant permit applications or sign -offs, to perform inspections, or to record documents, or the unavailability of required meetings of representatives of governmental agencies necessary to act to grant any approvals) or by reason of any rule, order or regulation of any department or subdivision thereof of any governmental agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency described herein.
23. Recording. The parties hereto s hall cause this Regulatory Agreement to be recorded in the official records of the County of Orange.
24. No Third Party Beneficiary . No claim as a third -party beneficiary under this Regulatory Agreement by any person, corporation or any other en tity, shall be made or be valid against the City or the Owner.
25. Prohibition Against Transfer.
25.1. Except as expressly provided in Section 3 of the Deed of Trust , the Owner shall not, without prior written approval of the City, which may not be unreasonably withheld, delayed or conditioned: (i) assign or attempt to assign this Regulatory Agreement or any right herein; or (ii) make any total or partial sale, transfer, conveyance, lease, leaseback, or assignment of the whole or any part of the Property or the impro vements thereon, with the exception of leases of the residential units as permitted by this Regulatory Agreement, or permit to be placed on any of the Property any unauthorized mortgage, trust deed, deed of trust, encumbrance or lien.
Notwithstanding anything to the con trary herein, Owner’s investor limited partner may, without City’s consent but upon written notice to City, transfer its interest to an Affiliate or remove the General Partner of Owner for cause and substitute said General Partner with an int erim Affiliate of the investor limited partner in the case of a General Partner default (e.g., gross negligence, fraud, willful misconduct).
25.2. In the absence of specific written agreement or approval by the City , no unauthorized sale, transfer, conveyance, lease, leasebac k or assignment of the Property shall be deemed to relieve the Owner or any other party from any obligations under this Regulatory Agreement.
26. City Approvals and Actions. The City Manager shall have the authority to make approvals, issue inte rpretations, w aive provisions, grant extensions of time, approve amendments to this Regulatory Agreement and execute documents on behalf of the City (to the extent not provided otherwise in this Regulatory Agreement), including, without limitation, any documents necessary to implement any changes in the number or affordability of the Qualifying Units, as may be required by TCAC , so long as such actions do not reduce the length o f affordability of the Qualifying Units or add to the costs incurred or to be in curred by the City as specified herein.
The City Manager reserves the right, in his or her sole and absolute discretion, to submit any requested modification, interpretation, amendment or waiver to the City Council if the City Manager determines or believes that such a ction could increase the ri sk, liability or costs to the Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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25 City, or reduce the length of affordability of the Project.
IN WITNESS WHEREOF, the Owner and the City have caused this Regulatory Agreement to be signed, acknowledged and attested on t heir behalf by duly authorized representatives in counterpart original copies which shall upon execution by all of the parties be deemed to be one original document.
[SIGNATURES ON FOLLOWING PAGES]
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26 CITY SIGNATURE PAGE
TO
REGULATORY AGREEMENT
(Aspan Court Affordable Housing Project)
CITY:
CITY OF LAKE FOREST,
a California municipal corporation
By: Date:
Debra D. Rose
City Manager
ATTEST:
City Clerk
CITY OF LAKE FOREST HOUSING AUTHORITY
By: Date:
Name: ________________________ Its: _____________________
ATTEST:
Secretary
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27 OWNER SIGNATURE PAGE
TO
REGULATORY AGREEMENT
(Aspan Court Affordable Housing Project)
OWNER:
[CORPORATE NAME], a California [CORPORATE TYPE]
By:
[NAME], [POSITION]
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ATTACHMENT NO. 1
1 ATTACHMENT NO. 1
TO
REGULATORY AGREEMENT
(Aspan Court Affordable Housing Project)
Property Legal Description
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LAKE
FOREST IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
THE LAN D REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LAKE
FOREST IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL 3, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 140, PAGES 40 AND 41 OF PARCEL MAPS, RECORDS OF SAID ORANGE COUNTY.
ALSO EXCEPTING THEREFROM ALL MINERAL RIGHTS, INCLUDING WITHOUT
LIMITATION ALL OIL, GAS, HYDROCARBON, AND SIMILAR RIGHTS, AND ALL
WATER, WATER RIGHTS, GEOTHERMAL STEAM, POWER WITHIN OR UNDERLYING
SAID PROPERTY, TOGETHER WITH THE PERPETUAL RIGHT OF DEVELOPMENT THEREOF; PROVIDED, HOWEVER, THAT THE RIGHTS THEREIN RESERVED AND
EXCEPTED DO NOT INCLUDE THE RIGHT TO ENTER UPON THE SURFACE AND THE TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED IN DEED FROM OCCIDENTAL LAND, I NC., A CALIFORNIA CORPORATION, RECORDED OCTOBER 14, 1977, IN BOOK 12414, PAGE 1152, OFFICIAL RECORDS.
APN 617-491-03; APN 617-491-04
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ATTACHMENT NO. 2
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ATTACHMENT NO. 2
TO
REGULATORY AGREEMENT
(Aspan Court Affordable Housing Project)
Certification of Tenant Eligibility
NOTE TO PROPERTY OWNER : This form is designed to assist you in computing Annual Income.
Re: Aspan Court Affordable Housing Project, Lake Forest, California I/We, the undersigned, state that I/we have read and answered fully, frankly and personally each of the following questions for all persons who are to occupy the unit being applied for in the property listed above. Listed below are the names of all persons who intend to reside in the unit:
1. 2. 3. 4. 5.
Names of
Members of
Household
Relationship
to Head of
Household Age
Social
Security
Number
Place of
Employment
6. Head of Household (check one):
Mother: ____
Father: ____
Other: _____________ (specify relationship – i.e. legal guardian, sister, brother, etc.)
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ATTACHMENT NO. 2
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Income Computation
7. The total anticipated income, calculated in accordance with the provisions of this Section 7, of all persons over the age of 18 years listed above for the 12 -month period beginning the date that I/we plan to move into a unit is $ ____________________.
Included in the total anticipated income listed above are:
(a) all wages and salaries, overtime pay, commissions, fees, tips and bonuses and other compensation for personal services, before payroll deductions; (b) the net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness or any allowance for depreciation of capital assets); (c) interest and dividends (including income from assets excluded below); (d) the full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar typ es of period receipts, including any lump sum payment for the delayed start of a periodic payment; (e) payments in lieu of earnings, such as unemployment and disability compensation, workmen’s compensation and severance pay;
(f) the maximum amount of pub lic assistance available to the above persons other than the amount of any assistance specifically designated for shelter and utilities; (g) periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; (h) all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and (i) any earned income tax credit to the extent that it exceeds income tax liability.
Excluded from such anticipated income are:
(a) casual, sporadic or irregular gifts;
(b) amounts which are specifically for or in reimbursement of medical expenses; (c) lump sum additions to family as sets, such as inheritances, insurance payments (including payments under health and accident insurance and workmen’s compensation), capital gains and settlement for personal or property losses;
(d) amounts of educational scholarship paid di rectly to the student of the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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ATTACHMENT NO. 2
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tuition, fees, book and equipment. Any amounts of such scholarships, or payments to veterans not used for the above purposes, are to be included in income; (e) special pay to a household member who is away from home and exposed to hostile fire;
(f) relocation payments under Title 11 of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970;
(g) foster child care payments;
(h) the value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1977;
(i) payments to volunteers under the Domestic Volunteer Service Act of 1973; payments received under the Alaska Native Claims Settlement Act. (j) income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes;
(k) payments or allowances made under the Department of Health and Human Services’ Low-Income Home Energy Assistance Program;
(l) payments received from the Job Training Partnership Act; (m) the first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the Court of Claims.
8. Do the persons whose income or contributions are included in item 6 above:
(a) have savings, stocks, bonds, equity in real property or other form of capital investment (excluding the values of necessary items of personal property such as furniture and automobiles and interests in Indian trust land)? ___ Yes ____ No; or (b) have they disposed of any assets (other than at a foreclosure or bankruptcy sale) during the last two years at less than fair market value? ___Yes ___No (c) If the answer to (a) or (b) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than $5,000? ___Yes ___No (d) If the answer to (c) is yes, state:
(i) the amount of income expected to be derived from such assets in the 12 - month period beginning on the date of ini tial occupancy in the unit that you propose to rent:
$______; and
(ii) the amount of such income, if any, that was included in item 6 above:
$______
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ATTACHMENT NO. 2
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9. (a) Are all of the individuals who propose to reside in the unit full -time students*? ____Yes ____No
*A full-time student is an individual enrolled as a full -time student during each of five calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curric ulum and norma lly has a regularly enrolled body of students in attendance and is not an individual pursuing a full -time course of institutional or farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. (b) If the answer to 8(a) is yes, is at least one of the proposed occupants of the unit a husband and wife entitled to file a joint federal income tax return? ____Yes ____No
10. Neither myself nor any other occupant of the unit I/we propose to rent is the Owner of the property in which the unit is located (hereinafter the “Owner”), has any family relationship to the Owner or owns, directly or indirectly, any interest in the Owner ship. For purposes of this section, indirect the Ownership by an individual shall mean the Ownership by a family member, the Ownership by a corporation, partnership, estate or trust in proportion to the Ownership or beneficial interest in such corporation, partnership, estate or trust held by th e individual o r a family member, and the Ownership, direct or indirect, by a partner of the individual.
11. This certificate is made with the knowledge that it will be relied upon by the Owner to determine maximum income for eligibility to occupy the unit; and I/we decl are that all information set forth herein is true, correct and complete and, based upon information I/we deem reliable and that the statement of total anticipated income contained in Section 7 is reasonable and based upon such investigation as the undersigned deemed necessary.
12. I/we will assist the Owner in obtaining any information or documents required to verify the statements made herein, including either an income verification from my/our present employer(s) or copies of federal tax returns for the immediately preceding calendar year.
13. I/we acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our agreement with the Owner to lease the units and will entitle the Owner to prevent or terminate my/our occupancy of the unit by institution of an action for eviction or other appropriate proceedings.
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ATTACHMENT NO. 2
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14. Housing Issuer Statistical Information (Optional --will be used for reporting purposes only):
Marital Status: _____________________________
Race (Head of Household)
White ________ Asian ________ Hispanic ________
African-American ________ Native American ________ Other ________ Physical Disability: Yes ________ No ________
I/we declare under penalty of perjury that the foregoing is true and correct.
Executed this ________ day of__________, ____ in the County of Orange, California.
____________________________________
Applicant
____________________________________
Applicant
[Signature of all persons over the age of 18 years listed in number 2 above required]
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ATTACHMENT NO. 2
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FOR COMPLETION BY PROPERTY THE OWNER ONLY:
1. Calculation of eligible income:
(a) Enter amount entered for entire household in 6 above: $______________ (b) (1) If answer t o 7(c) above i s yes, enter the total amount entered in 7(d)(1), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance ($_______________);
(2) Multiply the amount entered in 7(c) times the current passbook savings rate to determine wha t the total annual earnings on the amount in 7(c) would be if invested in passbook savings ($________), subtract from that figure the amount entered in 7(d)(2) and enter the remaining balance;
(3) Enter at right the greater of the amount ca lculated under (1) or (2) above:
$_____________;
(c) TOTAL ELIGIBLE INCOME
(Line l(a) plus line 1(b)(3): $________________
2. The amount entered in l(c):
_____ Qualifies the applicant(s) as a Qualified Household. _____ Does not qualify the applicant(s) as Qualified Household.
3. Apartment unit assigned:
Bedroom Size: ______ Rent: $________
4. This apartment unit [was/was not] last occupied for a period of 31 consecutive days by persons whose aggregate anticipated annual income, as certified in th e above manner upon their initial occupancy of the apartment unit, qualified them as a Qualified Household.
5. Method used to verify applicant(s) income:
_____ Employer income verification.
_____ Copies of tax returns.
_____ Other (_____________________)
_________________________________
Manager
The undersigned employee has applied for a rental unit located in a project financed in part by the City of Lake Forest for persons of very low income. Every income statement of a Docusign Envelope ID: 226C96F5-1B1F-4DFC-B012-50CCB40BDA77 Item: 9
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ATTACHMENT NO. 2
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prospective tenant must be string ently verified. Please indicate below the employee’s current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis.
Annual wages ________ Overtime ________ Bonuses ________ Commissions ________
Total current income ____________
I hereby certify that the statements above are true and complete to the best of my knowledge. _____________________________ _______________ ______________________________ Signature Date Title
I her eby grant you permission to disclose my income to ____________________________ in order that they may determine my income eligibility for rental of an apartment at [_____________________].
_____________________________ _______________
Signature Date
Please send to: ________________________________________ ________________________________________
________________________________________
I hereby attach copies of my individual federal and state income tax returns for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge.
_____________________________ _______________
Signature Date
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ATTACHMENT NO. 3
TO
REGULATORY AGREEMENT
(Aspan Court Affordable Housing Project)
Certificate of Continuing Program Compliance
For Annual Reporting Period Ending ________
The undersigned, _______________, as the authorized representative of _________________, a California _________________________ (the “Owner”), has read and is thoroughly familiar with the provisions of the various documents associated with the financial assistance provided by the City of Lake Forest (the “City”), as established in numerous documents including the Regulatory Agreement, dated as of __________, 2025, between the Owner and the City.
As of the date of this Certificate, the following percentage of residential units in the Project are (i) occupied by Qualified Households (as such term is defined in the Regulatory Agreement) or (ii) are currently vaca nt and being held available for such occupancy and have been so held continuously since the date a Qualified Household vacated such unit, as indicated:
Number of Units occupied by Qualified Households: ________________ Number of Vacant Units: ________________
Number of Qualified Households who commenced
Occupancy during the preceding reporting period: ________________
Attached is a separate sheet ( the “Occupancy Summary ”) listing, among other items, the appropriate information for each residential unit in the Project, the occupants of each unit and the rent paid for each unit. The information contained thereon is true and accurate and reasonable and is based on information submitted to the Owner and is certified under penalty of perjury b y each tenant.
[Signatures on following page]
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The undersigned hereby certifies that (1) a review of the activities of the Owner during such reporting period and of the Owner ’s performance under the Regulatory Agreement has been made under the supervisio n of the undersigned; and (2) to the best of the knowledge of the undersigned, based on the review described in clause (1) hereof, the Owner is not in default under any of the terms and provisions of the above documents.
Dated:______________________ OWNER
__________________, a ____________________
By: ______________________________
Name:_______________________________
Its: _________________________________
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OCCUPANCY SUMMARY
Total Number of Units in the Project: ___________
Total Units occupied by Qualified Households: ___________ Total Units available for rent to Qualified Households: ___________ ATTACHED IS THE FOLLOWING INFORMATION:
A. Resident and rental information on each occupied apartment in the complex.
B. Certification of Tenant Eligibility for all Qualified Households who have moved into ________________, Lake Forest, California, since the filing of the last Occupancy Summary. The same are true and correct to the best of the undersi gned’s knowledge and belief.
Dated:______________________ OWNER:
______________________ , a _________________
By: ____________________________________
Name:_______________________________
Its: _________________________________
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ATTACHMENT NO. 7
BORROWER’S PRO FORMA
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ATTACHMENT NO. 8
CERTIFICATE OF COMPLETION
FORM OF CERTIFICATE OF COMPLETION
I, the City Manager of the City of Lake Forest (the “City”), hereby certify as follows:
Section 1 . The Project, required to be constructed in accordance with th at certain Affordable Housing And Loan Agreement (the “Agreement”) dated [ INSERT DATE] by and between the City and National Community Renaissance of California, a California nonprofit public benefit corporation (the “Borrower”) on certain real property, as more specific ally described in the Agreement ( the “Property”), has been completed in accordance with the provisions of the Agreement.
Section 2. This Certificate of Completion shall constitute a conclusive determination by the City of Borrower’s satisfact ion of its obl igation under the Agreement to complete the construction of the Project on the Property, excluding any normal and customary tenant improvements and minor building “punch -list” items. Issuance of this Certificate of Completion shall be deemed to terminate the Agreement. The Agreement is an official record of the City and a copy of the Agreement may be inspected in the office of the City Clerk located at 100 Civic Center Drive, Lake Forest, CA 92630, during the regular business hours of the City.
DATED AND ISSUED this _____ calendar day of _______________, ______.
__________, City Manager
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ATTACHMENT 2
Item: 9
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CITY COUNCIL AGENDA REPORT
MEETING DATE: 3/18/2025
DEPARTMENT: City Manager
SUBJECT:
APPROVAL OF AN AFFORDABLE HOUSING LOAN AGREEMENT WITH
NATIONAL COMMUNITY RENAISSANCE FOR THE ASPAN COURT
AFFORDABLE HOUSING PROJECT
RECOMMENDED ACTION(S):
Approve a Resolution titled: “A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF LAKE FOREST, CALIFORNIA, APPROVING AN AFFORDABLE
HOUSING AGREEMENT BETWEEN THE CITY OF LAKE FOREST, THE LAKE
FOREST HOUSING AUTHORITY AND NATIONAL COMMUNITY
RENAISSANCE”
EXECUTIVE SUMMARY:
On September 14, 2023, the City of Lake Forest (“City”) issued a Notice of Funding Availability (“NOFA”) to develop housing affordable to lower-income households within the community. The NOFA was issued to enable the selection of a qualified development partner and identified approximately $3.35 million in Affordable Housing In-Lieu Funds to support the project. In March 2024, the City approved an Exclusive Negotiation Agreement (“ENA”) with National Community Renaissance (“National CORE”) to develop housing affordable to lower-income households.
During its search for a site, National CORE identified gaps in funding and inquired if additional funds could be made available for development. Staff identified additional funds in the Lake Forest Housing Authority (“Authority”) and negotiated the addition of a dedicated room with its own entrance and restroom for Lake Forest Police Services to use for report writing and as a breakroom.
National CORE agreed to provide a dedicated space in exchange for additional funding totaling $4.35 million.
Subject to formal approvals, the City and Authority may commit a total of $4.35 million of the City’s Affordable Housing In Lieu Fees and the Authority’s Low and Moderate Income Housing Asset Fund for the development of this project.
As a condition of its loan, National CORE is required to provide evidence of an executed affordable housing agreement with the City. The Affordable Housing ATTACHMENT 2
Item: 9
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Agreement (“Agreement”) serves to clarify the performance obligations of the City and National CORE, and outlines long-term covenants recorded against the property (55-years), tenant restrictions, negotiated project enhancements, prescribed rent levels, and a property management plan.
The Agreement also stipulates the legal terms and conditions for the City and Authority loan. Staff recommend that the City Council approve a resolution (Attachment), subsequently approving the Agreement between the City, Authority, and National CORE, to advance development of the proposed affordable housing project named the Aspan Court Project. The proposed Agreement functions in the same manner as the Affordable Housing and Loan Agreement that the City executed with National CORE in 2020 for the Mountain View Affordable Project.
BACKGROUND:
General Plan Update/Housing Element/Goals
In 2018, the City began working toward updating its General Plan. The General Plan is a long-term policy document which identifies the community’s vision for the future and provides a framework to guide decisions on growth, development, and conservation of open space and resources. The General Plan was developed with extensive community outreach and public participation including visioning workshops, pop-up events, online surveys and polls, City Council briefings, community open houses, a dedicated website, and more. In addition, there was a General Plan Advisory Committee which consisted of 18 residents, homeowners, association representatives, business leaders, representatives from the school district, and commissioners. The General Plan Advisory Committee met more than ten times between September 2018 and September 2019 to identify key issues and challenges over the ensuing 20 years. The General Plan Update was adopted by the City Council in June 2020.
An element of a General Plan is Land Use. As residential and nonresidential development continues, the Land Use Element guides where growth and development will occur in the city. The Land Use Element identifies five mixed use development focus areas in the city. These areas include Land Use designations Mixed Use 32 and 43. These designations allow a maximum density of 32 and 43 dwelling units per net acre of land for residential projects.
The City’s Housing Element Update for the 2021-2029 planning period was submitted to the California Department of Housing and Community Development (“HCD”) and was certified by HCD on February 24, 2023. The Housing Element provides a comprehensive demographic community profile of the city, including ATTACHMENT 2
Item: 9
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population, age, race/ethnicity, income, housing tenure, and employment. The Housing Element outlines goals that guide local housing policies and actions, including:
Goal 1: Adequate housing to meet the existing and future needs of Lake Forest residents.
Goal 2: Maintenance and enhancement of the quality of existing residential neighborhoods.
Goal 3: Increased opportunity for home ownership.
Goal 4: Promote equal opportunity for all residents to reside in housing of their choice.
The Aspan Court Project is located in Mixed Use Zone 43 and is considered a "by right" project. This means it can be built without requiring any discretionary approvals from the City as long as it adheres to all objective development and design standards in the City’s Code and State laws.
Affordable Housing Trust Fund/Developer In-Lieu Fees
Between 2008-2015, the City entered into Development Agreements with nine landowners for new housing developments in the city. The Development Agreements include Affordable Housing Implementation Plans that are consistent with the City’s goal to incorporate a minimum of 15% affordable units in new developments. Given the specific housing development’s site size, product type, and land constraints, some landowners are required to pay In-Lieu Fees versus constructing the affordable housing units on site. All affordable housing units developed with this funding source must be income restricted for at least 30 years.
Housing Authority Low- and Moderate-Income Housing Asset Fund The Low- and Moderate-Income Housing Asset Fund (“Housing Asset Fund”) houses all former Lake Forest Redevelopment Agency housing assets and is subject to expenditure requirements detailed in Health and Safety Code (“HSC”) Section 34176.1. The Authority oversees expenditure of the Housing Asset Fund.
Housing Asset Funds may be used on a variety of project development costs, but may not be used for maintenance or operation activities. No more than 20% of the available funds may be spent on households earning 60% to 80% (Low Income) of the Area Median Income (“AMI”) and at least 30% of the funds must be spent on rental households earning 30% (Extremely Low) or less of the AMI.
All affordable housing units developed with this funding source must be income restricted for at least 15-years for mutual self-help units, 45-years for home ownership units, and 55-years for rental units.
ATTACHMENT 2
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DISCUSSION:
Staff worked with the City Attorney’s Office to negotiate and prepare the proposed Agreement between the City, Authority, and National CORE. The proposed Agreement outlines performance requirements to facilitate the Aspan Court Project’s development. The proposed Agreement further sets a defined timeline for National CORE to meet various performance criteria described in detail in the following section. The proposed Agreement functions in the same manner as the Affordable Housing and Loan Agreement that the City executed with National CORE in 2020 for the Mountain View Affordable Project.
Notice of Funding Availability and Exclusive Negotiation Agreement On September 14, 2023, the City released the NOFA. The City extended the submission deadline three times to obtain additional Statement of Qualifications.
The City’s Purchasing and Contracting Guidelines require a Request for Qualifications to be posted for a minimum of three weeks. The NOFA was open for a total of nine weeks. The NOFA identified approximately $3.35 million in Affordable Housing In Lieu funds to support the project.
The City entered into an ENA with National CORE in March 2024, and National CORE began searching for a site to build an affordable housing project. National CORE is in escrow for the purchase of the Aspan Office Center located at 22471 Aspan Street. The site we selected due to its lack of development restraints, proximity to shopping centers and bus stops, and size. During its search, National CORE identified gaps in funding and inquired if additional funds would be made available for development. Staff identified additional funds in the Authority and negotiated the addition of a dedicated room with its own entrance and restroom for Lake Forest Police Services to use for report writing and as a breakroom. National CORE agreed to provide a dedicated space in exchange for additional funding totaling $4.35 million.
City/Authority Loan
The City and Authority will provide financial assistance to National CORE in the form of a loan in the amount not to exceed $4.35 million for certain acquisition and development expenses associated with the Aspan Court Project. The loan is comprised of affordable housing in-lieu fees the City received through negotiated development agreement fees with market-rate housing developers and the Housing Asset Fund.
National CORE’s obligation to repay the City and Authority Loan would be secured by the Deed of Trust. National CORE shall remit loan payments to the City commencing the first year in which its residual receipts are positive. This ATTACHMENT 2
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means that the City would be repaid each year, as would other funding sources, from the net operating income generated by the Aspan Court Project once all other debt obligations are satisfied and based on the City’s contribution.
Repayment of Loan
National CORE’s obligation to repay the City and Authority for the Affordable Housing Loan is outlined in the Promissory Note. National CORE repays the City and Authority through Residual Receipts (profit after expenses) generated by the Aspan Court Project. Similarly, National CORE is also required to make annual payments to other lenders; therefore, the City and Authority loan is subordinate and repaid through a waterfall provision noted in the Agreement. Repayments to the City and Authority are based on 50% of the Residual Receipts generated by the Aspan Court Project. The amount the Borrower pays will be determined by the ratio of the City and Authority loan amount to the total of all loans for the Aspan Court Project that are paid by the Residual Receipts; payments are due by May 31 of the following year.
Affordability Covenants
The proposed Agreement requires that the Aspan Court Project be operated as a multifamily residential community on the property with residential units made available to qualified households at an affordable rent. The current Affordable Rent is listed below but is subject to change pursuant to state law or the California Tax Credit Allocation Committee (“TCAC”). National CORE is required to ensure the affordability restrictions follow the more restrictive limits based on funding sources:
Table 1: HCD Income/Affordability limits
INCOME
LIMIT
CATEGORY
BASED ON
2020 HCD
INCOME
LIMITS
2 PERSON
HOUSEHOLD
INCOME
LIMIT
4 PERSON
HOUSEHOLD
INCOME
LIMIT
ONE
BEDROOM
MONTHLY
RENT
TWO
BEDROOM
MONTHLY
RENT
THREE
BEDROOM
MONTHLY
RENT
Extremely
Low Income
(>30% AMI)
$33,270 $41,610 $780 $936 $1,081
Very Low
Income
(>40%)
$44,360 $55,480 $1,040 $1,248 $1,442
Very Low
Income
(>50%)
$55,450 $69,3690 $1,300 $1,560 $1,803
Low Income
(>60%)
$66,540 $83,220 $1,560 $1,872 $2,163
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INCOME
LIMIT
CATEGORY
BASED ON
2020 HCD
INCOME
LIMITS
2 PERSON
HOUSEHOLD
INCOME
LIMIT
4 PERSON
HOUSEHOLD
INCOME
LIMIT
ONE
BEDROOM
MONTHLY
RENT
TWO
BEDROOM
MONTHLY
RENT
THREE
BEDROOM
MONTHLY
RENT
Median
Income
(>70%)
$77,630 $97,090 $1,820 $2,184 $2,524
Moderate
Income
(>80%)
$88,720 $110,960 $2,080 $2,496 $2,885
The Aspan Court Project will provide a total of 50 units with all units (except the manager’s unit) rented at an affordable rate. The apartment mix consists of 14 three-bedroom units, 16 two-bedroom units, and 20 one-bedroom units which will be allocated among various family income threshold limits ranging from 30% of the County’s AMI to 80% of the County’s AMI. A total of 15 one-bedroom units shall be occupied as Permanent Supportive Housing and one three-bedroom unit will be exempt from affordable rates to be used as the property manager’s unit.
The Agreement outlines the breakdown of income-qualified tenants at the affordable income level mix below:
20 1-bedroom units including
o 15 Permanent Supportive Housing Units
o 5 50% AMI Households
16 2-bedroom units including
o 2 30% AMI Households
o 1 50% AMI Households
o 13 60% AMI Households
14 3-bedroom units including
o 2 30% AMI Households
o 3 60% AMI Households
o 2 70% AMI Households
o 6 80% AMI Households
o 1 exempt Manager’s Unit
It is important to note the prescribed rent limits may change due to external factors outside of City and National CORE’s control. The rent limits depend on the amount and type of funding National CORE is able to secure. For instance, the TCAC, which facilitates the investment of private capital into the development of affordable rental housing, has a critical nine percent (9%) tax credit application deadline of July 8, 2025. Additionally, National CORE is reliant on the County of Orange to provide Project Based Vouchers (“PBV”) for its proposed 15 ATTACHMENT 2
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Permanent Supportive Housing Units. If National CORE is unsuccessful in securing the 9% tax credit/PBVs, the unit mix would need to change for the project’s viability.
Additionally, the Agreement sets occupancy limits, to the greatest extent allowed by law, regarding the number of residents that live in each apartment and gives preference to persons who are verifiably living or employed within the City of Lake Forest (to the greatest extent legally allowable). The maximum occupancy of the units shall not exceed more than such number of persons as is equal to two people per bedroom, plus one:
Table 2: Occupancy Limits:
Bedroom Count Maximum Occupancy
1 3
2 5
3 7
Community Outreach
National CORE conducted two (2) community workshops. The first meeting was held at Forest Gardens Mobile Home Park located at 24001 Muirlands Blvd, Lake Forest, California 92630. The second was held at Mountain View located at 24551 Raymond Way. The community workshops were designed to encourage community feedback on all aspects of the Aspan Court Project including site design, parking, traffic, landscaping, programming, tenancy, and management.
National CORE prepared and provided draft documents and presentations to City staff in advance of the meeting for review and comment.
Active Onsite Property Management
The Agreement also includes a requirement for National CORE to submit a property management plan to the City Manager for review and approval which should include:
A detailed plan and strategy for long term marketing, operation, maintenance, repair, and security of the Project
List of social services available for residents
On-site parking policies
Method of tenant selection
Rules and regulations for tenants
Other rental policies for the Project
Hiring of Property Manager
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Conclusion
The Agreement allows the City and Authority to loan City and Authority affordable housing funds (affordable housing in-lieu fees, and low-mod funds) to create a high-quality affordable housing project in Lake Forest. The construction of affordable units, particularly for extremely low, very low, and low-income households will contribute toward providing units against the City’s Regional Housing Needs Assessment (“RHNA”) numbers. The Agreement requires that the developer obtain all entitlements, and meet local applicable development standards. In addition, the Agreement includes provisions and covenants required prior to, during, and after project completion. The proposed Agreement, as written, provides National CORE with a $4.35 million loan in return for a high- quality affordable housing community that, per the Agreement’s terms, will be well managed.
National CORE is an owner-operator of affordable housing projects, meaning that its staff actively manage the property. The proposed Aspan Court Project would include a unit for an onsite property manager who ensures the units are leased to income qualified residents and enforces other community rules.
National CORE also ensures that the unit occupancy matches the lease to prevent overcrowding. Residents that violate the terms of their lease agreements are not eligible to continue living in the units. The City’s enforcement mechanisms include the Conditions of Approval imposed on the entitlement as well as provisions in the Agreement requiring submittal of a management plan which sets forth in detail property, including unit, management.
At this time, staff recommend that the City Council approve a resolution, subsequently approving the Agreement between the City and National CORE.
California Environmental Quality Act
The Agreement is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(3) and 15378(b)(4) of the State CEQA Guidelines, which provides that the definition of a CEQA project does not include the creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. The Agreement is not a project because it merely provides financial assistance for a ministerially approved affordable housing development that was not a project subject to CEQA review pursuant to Government Code Section 21080(b)(1). As such, the Agreement is not a project subject to CEQA and no further environmental review is required. Notwithstanding the foregoing, if the Agreement is a project subject to CEQA, the action approving the Agreement is exempt from CEQA as it is in furtherance of a permanent supportive housing project which is statutorily exempt from CEQA pursuant to California Government Code Section 65651(b)(2). If approved, City staff will file a Notice of Exemption within 5 days of this action.
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FISCAL IMPACT:
Approval of the attached Resolution would reserve $3.7 million of In-Lieu Fees available from the City’s Affordable Housing Trust Fund and $650,000 of the Housing Authority’s Low- and Moderate-Income Housing Asset Fund. Pending approval, the appropriations would take place as part of the Mid-Year Budget Review.
ATTACHMENTS:
Resolution No. 2025-XX
Initiated By: Adrian Grijalva, Economic Development/Housing Manager Submitted By: Keith Neves, Assistant City Manager
Approved By: Debra Rose, City Manager
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ATTACHMENT
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4 RESOLUTION NO. 2025- ______
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE
FOREST, CALIFORNIA, APPROVING AN AFFORDABLE HOUSING
AGREEMENT BETWEEN THE CITY OF LAKE FOREST, THE LAKE
FOREST HOUSING AUTHORITY AND NATIONAL COMMUNITY
RENAISSANCE
WHEREAS, on September 14, 2023, the City of Lake Forest (“City”) issued a Notice of Funding Availability (“NOFA”) to develop additional housing affordable to lower- income households within the community. The NOFA was issued to enable the selection of a qualified development partner. In March 2024, the City approved an Exclusive Negotiation Agreement (“ENA”) with National Community Renaissance (“Developer”) to develop housing affordable to lower-income households.
WHEREAS, Developer is in escrow or has purchased, that certain real property located at 22471 Aspan St, Lake Forest, CA 92630 (APN 617-491-03 and APN 617-491- 04), for the construction of a 50-unit residential rental complex that will also include a dedicated room with its own entrance and restroom for Lake Forest Police Services to use for report writing and as a breakroom (“Project”).
WHEREAS, the City, Lake Forest Housing Authority (“Authority”) and the Developer mutually seek to enter into an Affordable Housing Agreement (“AHA”) for the Project, attached to this Resolution as Exhibit A, to facilitate development of the Project, and its 50-unit residential rental complex and dedicated Lake Forest Police Services room, through development incentives provided in exchange for the construction of residential units designed and marketed to meet the needs of low income households subject to the conditions and requirements set forth therein; and WHEREAS, City and Authority desires to assist Developer in the construction and development of the Project by providing financial assistance in the form of a loan in the amount not to exceed Four Million Three Hundred Fifty Thousand Dollars ($4,350,000.00), which is funded through the following: (i) Three Million Seven Hundred Thousand Dollars ($3,700,000.00) of In-Lieu Fees available from the City’s Affordable Housing Trust Fund, and (ii) Six Hundred Fifty Thousand Dollars ($650,000.00) of funds available from the Authority’s Low- and Moderate-Income Housing Asset Fund; and WHEREAS, the Project is in the best interest of the City and the health, safety and welfare of the residents of the City, and in accordance with the public purposes and provisions of applicable federal, state and local laws and requirements; and WHEREAS, the City’s approval of the AHA is not a project under the California Environmental Quality Act (“CEQA”) as it is merely a governmental funding mechanism.
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4 If however it is a project under CEQA, the City find’s that its approval of the AHA is exempt from CEQA pursuant to Government Code Section 65651(b)(2); and WHEREAS, members of the public have been provided the opportunity to comment upon the Affordable Housing Agreement.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE FOREST DOES RESOLVE, DETERMINE, FIND AND ORDER AS FOLLOWS:
SECTION 1. RECITALS. The City Council hereby finds that the foregoing recitals are true and correct and are incorporated herein as substantive findings of this Resolution.
SECTION 2. CEQA. The City Council finds that the AHA is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(3) and 15378(b)(4) of the State CEQA Guidelines, which provides that the definition of a CEQA project does not include the creation of government funding mechanisms or other government fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. The AHA is not a project because it is an agreement to provide financial assistance for a ministerially approved affordable housing development that was not a project subject to CEQA review pursuant to Government Code Section 21080(b)(1). As such, the AHA is not a project subject to CEQA and no further environmental review is required.
Notwithstanding the foregoing, the City also finds that if the AHA is a project subject to CEQA, the action approving the AHA is exempt from CEQA as it is in furtherance of a permanent supportive housing project which is statutorily exempt from CEQA pursuant to California Government Code Section 65651(b)(2). City staff is hereby directed to file a Notice of Exemption within 5 days of this action.
SECTION 3. CITY COUNCIL ACTION. The City Council hereby approves the Affordable Housing Agreement (“Agreement”) in substantially final form, attached hereto as Exhibit A, as may be amended by the City Manager or City Attorney, and incorporated herein by reference. The City Council authorizes the Mayor to sign the Agreement in its final form, as such procedure is set forth within the Agreement.
PASSED, APPROVED AND ADOPTED this 18th day of March, 2025, by the following vote, to wit:
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4 __________________________
SCOTT VOIGTS
MAYOR
ATTEST:
______________________________
LISA BERGLUND
CITY CLERK
APPROVED AS TO FORM:
________________________
CITY ATTORNEY
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4 STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF LAKE FOREST )
I, Lisa Berglund, City Clerk of the City of Lake Forest, do hereby certify that the foregoing Resolution No. 2025-__ was duly passed and adopted by the City of Lake Forest at a regular meeting thereof, held on the 18th day of March 2025, by the following vote, to wit:
AYES: BOARD MEMBERS:
NOES: BOARD MEMBERS:
ABSENT: BOARD MEMBERS:
ABSTAIN: BOARD MEMBERS:
_____________________________
LISA BERGLUND
CITY CLERK
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4 EXHIBIT A
AFFORDABLE HOUSING AGREEMENT
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4 AFFORDABLE HOUSING AND LOAN AGREEMENT
(Aspan Court Affordable Housing Project)
by and between
CITY OF LAKE FOREST,
a California municipal corporation,
and
CITY OF LAKE FOREST HOUSING AUTHORITY
and
National Community Renaissance of California,
a California nonprofit public benefit corporation
[Dated as of _____________, 2025 for reference purposes only] ATTACHMENT 2
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1. DEFINITIONS.
2. FINANCING. ................................................................Error! Bookmark not defined.
2.1 Amount and Source of City Loan......................Error! Bookmark not defined.
2.2 Cost Reductions or Increases.............................Error! Bookmark not defined.
2.3 Permissible Use of City Loan; Eligible Loan ExpensesError! Bookmark not defined.
2.4 City Loan Funding Conditions ..........................Error! Bookmark not defined.
2.5 Disbursements of City Loan..............................Error! Bookmark not defined.
2.6 Repayment of City Loan; Deed of Trust ...........Error! Bookmark not defined.
2.7 Execution and Delivery of Documents..............Error! Bookmark not defined.
2.8 Borrower's Evidence of Financial Capability....Error! Bookmark not defined.
3. DEVELOPMENT OF THE PROJECT.........................Error! Bookmark not defined.
3.1 Scope of Development ......................................................................................11
3.2 Development Standards.....................................................................................12
3.3 No Commitment to Development .....................................................................13
3.4 Future Proposals Subject to Review..................................................................13
3.5 Community Outreach ........................................................................................13
3.6 Final Plans.........................................................................................................14
3.7 Schedule of Performance ..................................................................................14
3.8 Compliance with Permits and Laws..................................................................14
3.9 Insurance ...........................................................................................................15
3.10 Right of Access .................................................................................................16
3.11 Borrower Responsible for Cost of Development ..............................................16
3.12 Indemnity ..........................................................................................................16
3.13 Prevailing Wage ................................................................................................16
3.14 Relocation..........................................................................................................17
4. USE OF SITE; AFFORDABILITY COVENANTS.....Error! Bookmark not defined.
5. OPERATING STANDARDS .......................................Error! Bookmark not defined.
5.1 Selection of Tenants ...........................................Error! Bookmark not defined.
5.2 Occupancy Limits...............................................Error! Bookmark not defined.
5.3 Income of Tenants ..............................................Error! Bookmark not defined.
5.4 Onsite Services ...................................................Error! Bookmark not defined.
5.5 Property Manager...............................................................................................19
5.6 Property Management Plan ................................................................................20
5.7 Gross Mismanagement.......................................................................................20
5.8 Code Enforcement..............................................................................................21
6. DEFAULTS AND REMEDIES....................................................................................22 ATTACHMENT 2
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6.1 Defaults-General................................................Error! Bookmark not defined.
6.2 Institution of Legal Actions...............................Error! Bookmark not defined.
6.3 Applicable Law .................................................Error! Bookmark not defined.
6.4 Additional City Remedies .................................Error! Bookmark not defined.
6.5 Rights and Remedies are Cumulative................Error! Bookmark not defined.
7. GENERAL PROVISIONS............................................Error! Bookmark not defined.
7.1 Attorneys’ Fees..................................................Error! Bookmark not defined.
7.2 Notices...............................................................Error! Bookmark not defined.
7.3 Reserved ............................................................Error! Bookmark not defined.
7.4 Binding on Heirs................................................Error! Bookmark not defined.
7.5 Entire Agreement, Waivers, and Amendments .Error! Bookmark not defined.
7.6 Interpretation; Governing Law..........................Error! Bookmark not defined.
7.7 Authority............................................................Error! Bookmark not defined.
7.8 Nonliability of City Officials and Employees...Error! Bookmark not defined.
7.9 Enforced Delay; Extension of Times of Performance Error! Bookmark not defined.
7.10 Severability........................................................Error! Bookmark not defined.
7.11 Representations and Warranties ........................Error! Bookmark not defined.
7.12 City Contract Administration ............................Error! Bookmark not defined.
7.13 Plans, Drawings and Documents to be Assigned to CityError! Bookmark not defined.
7.14 Execution in Counterpart...................................Error! Bookmark not defined.
7.15 Attachments.......................................................Error! Bookmark not defined.
ATTACHMENTS
1 LEGAL DESCRIPTION OF SITE
2 SCHEDULE OF PERFORMANCE
3 PROJECT BUDGET
4 PROMISSORY NOTE SECURED BY DEED OF TRUST WITH ASSIGNMENT OF RENTS
5 DEED OF TRUST WITH ASSIGNMENT OF RENTS
6 REGULATORY AGREEMENT AND DECLARATION OF COVENANTS AND
RESTRICTIONS
7. BORROWER’S PRO FORMA
8. CERTIFICATE OF COMPLETION
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AFFORDABLE HOUSING AND LOAN AGREEMENT
This AFFORDABLE HOUSING AND LOAN AGREEMENT (this “Agreement”) is made and entered into on _______, ____, 2025, by and among the CITY OF LAKE FOREST, a California municipal corporation, the CITY OF LAKE FOREST HOUSING AUTHORITY (collectively herein referred to as the “City”) and NATIONAL COMMUNITY RENAISSANCE OF CALIFORNIA, a California nonprofit public benefit corporation (the “Borrower”). The City and Borrower are herein occasionally referred to individually as “party” and collectively as “parties.”
R E C I T A L S
A. Borrower is in escrow to acquire or has acquired that certain real property consisting of approximately 1.62 acres of land area located in the City of Lake Forest, County of Orange, State of California, as more particularly described in the legal description attached hereto as Attachment No. 1 (the “Site” or the “Property”).
B. Borrower desires to develop the Site with a 50-unit affordable residential rental complex and related interior and exterior improvements on the proposed 1.62 acre site (the “Project”). Borrower shall develop the units and related improvements pursuant to the terms and conditions of this Agreement. The Project will be operated as a long-term affordable housing project, with Forty-Nine (49) units to be rented at an Affordable Rent for a period of fifty-five (55) years as more particularly described in the Regulatory Agreement attached hereto as Attachment
6. If there are on-site and/or off-site improvements, they will be called out in the Project development and building plans and permits to be approved by City.
C. City desires to assist Borrower in the development of the Project by providing financial assistance to Borrower in the form of a loan in the amount not to exceed Four Million Three Hundred Fifty Thousand Dollars ($4,350,000) for certain acquisition and development expenses associated with the Project. The referenced amount has two funding sources: (1) Three Million Seven Hundred Thousand Dollars ($3,700,000) is in-lieu fees received by the City under City’s Developer fund affordable housing program and 2) Six Hundred Fifty Thousand Dollars ($650,000) funded by the Housing Authority Low and Moderate Income Housing Asset Fund.
D. The Project is in the best interest of the City and the health, safety and welfare of the residents of the City, and in accordance with the public purposes and provisions of applicable federal, state and local laws and requirements.
C O V E N A N T S
Based upon the foregoing Recitals and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Borrower hereby agree as follows:
1. DEFINITIONS.
The following terms as used in this Agreement shall have the meanings given below unless expressly provided to the contrary:
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1.1 “Affordable Rent” shall mean a cost not in excess of that which may be charged the applicable household in conformity with the Prescribed Rent Levels and Tenant Mix pursuant to those limitations established by TCAC and, as applicable, this Agreement. The current Affordable Rent is as follows, but is subject to change pursuant to state law, as issued by the California Department of Housing and Community Development, or TCAC. The following table is meant to be illustrative of Affordable Rent, however, Borrower is required to ensure applicable affordability restrictions follow the more restrictive limits based on funding sources.
INCOME LIMIT
CATEGORY BASED
ON 2024 HCD
INCOME LIMITS
2 PERSON
HOUSEHOLD
4 PERSON
HOUSEHOLD
ONE
BEDROOM
TWO
BEDROOM
THREE
BEDROOM
Extremely Low
Housing (>30%
AMI)
$33,270 $41,610 $780 $936 $1,081
Very Low Income
(>40% AMI)
$44,360 $55,480 $1,040 $1,248 $1,442
Very Low Income
(>50% AMI)
$55,450 $69,360 $1,300 $1,560 $1,803
Low Income
(>60% AMI)
$66,540 $83,220 $1,560 $1,872 $2,163
Median Income
(>70% AMI)
$77,630 $97,090 $1,820 $2,184 $2,524
Moderate Income
(>80% AMI)
$88,720 $110,960 $2,080 $2,496 $2,885
1.2 “Agreement” shall mean this Affordable Housing and Loan Agreement between City and Borrower, including all exhibits and other documents attached hereto.
1.3 “Borrower” shall mean National Community Renaissance of California, a California nonprofit public benefit corporation. The term “Borrower” includes any legally permissible assignee or successor to the rights, powers, and responsibilities of Borrower hereunder, in accordance with this Agreement and with Section 25 of the Regulatory Agreement.
1.4 “City” shall mean the City of Lake Forest, a municipal corporation, organized under the laws of the State of California and having its offices at 100 Civic Center Drive, Lake Forest, CA 92630.
1.5 “City Loan” shall mean the loan in the amount not to exceed the sum of Four Million Three Hundred Fifty Thousand Dollars ($4,350,000) to be provided by City to Borrower, as more fully explained in Section 2 of this Agreement. The City Loan has two funding sources: (1) Three Million Seven Hundred Thousand Dollars ($3,700,000) is in-lieu fees received by the City under City’s Developer fund affordable housing program and 2) Six Hundred and Fifty Thousand Dollars ($650,000) funded by the Housing Authority Low and Moderate Income Housing Asset Fund.
1.6 “City Note” shall mean the Promissory Note Secured by Deed of Trust with Assignment of Rents, in the form attached hereto as Attachment No. 4 which sets forth the terms for Borrower’s repayment of the City Loan to City.
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1.7 “Deed of Trust” shall mean the Deed of Trust With Assignment of Rents in the form attached hereto as Attachment No. 5 which secures Borrower’s payment obligations under the City Note.
1.8 “Deferred Developer Fee” shall mean the portion of the Developer Fee that is to be paid to Borrower after the completion of the Project out of income generated from the Project.
Borrower shall notify City of the amount of the Deferred Developer Fee, if any, in connection with Borrower’s submittal of its evidence of financial capability pursuant to Section 2.8 of this Agreement.
1.9 “Developer Fee” shall mean the gross fee to be paid to Borrower for the development of the Project in the amount of Two Million Eight Hundred Thousand Dollars ($2,800,000). It is anticipated Borrow will receive payment of that much of the Developer Fee which might be paid in cash in compliance with TCAC regulations in cash from funding sources for the Project.
1.10 “Effective Date” shall mean the date this Agreement is approved by City, which date shall be inserted in the preamble to this Agreement.
1.11 “Eligible Loan Expenses” shall mean the expenses set forth under the headings “Direct Construction Cost,” and “Soft Costs” in the Project Budget for which the City Loan may be used.
1.12 “Extremely Low-Income Households” shall mean households earning not greater than thirty (30%) of the Orange County Median Income pursuant to Health and Safety Code Section 50106.
1.13 “Funding Conditions” shall mean the conditions set forth in Section 2.4 of this Agreement that must be satisfied prior to City providing the City Loan to Borrower.
1.14 “Funding Conditions Satisfaction Date” shall mean the date on which all of the Funding Conditions are actually satisfied.
1.15 “General Partner Capital Contribution” shall mean the capital contribution made by the General Partner in the form of equity payment or a loan that is paid to the Project prior to permanent loan conversion in the amount of One Hundred Dollars ($100).
1.16 “Area Median Income” or “AMI for Orange County” or “Median Income” means the most recent applicable county family income published by California Tax Credit Allocation Committee (TCAC) for that portion of Orange County in which the Project is located.
1.17 “Permanent Supportive Housing” shall mean permanent housing with no limit on the length of stay that is occupied by the target population (Extremely Low-Income Households) and that is linked to onsite or offsite services that assist the supportive housing residents in retaining the housing, improving his or her health status, and maximizing his or her ability to live and, when possible, work in the community, pursuant to Health and Safety Code Section 50490.
1.18 “Permitted Encumbrances” shall have the meaning ascribed in Section 2.9.1 of this Agreement.
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1.19 “Prevailing Wage Action” shall mean any of the following: (a) any determination by the California Department of Industrial Relations that prevailing wage rates should have been paid, but were not; (b) any determination by the California Department of Industrial Relations that higher prevailing wage rates than those paid should have been paid; (c) any administrative or legal action or proceeding arising from any failure to comply with the Federal Davis-Bacon Act (codified as 40 U.S.C. §§ 3141 et seq.) or California Labor Code Sections 1720 through 1781, as amended from time to time, regarding prevailing wages, including maintaining certified payroll records; or (d) any administrative or legal action or proceeding to recover wage amounts at law or in equity.
1.20 “Prescribed Rent Levels and Tenant Mix” shall mean, based upon all Project funding sources, the following (unless modified with prior approval of the City): (a) Twenty (20) one- bedroom units, Fifteen (15) of which shall be occupied as Permanent Supportive Housing, Five (5) of which shall be occupied by 50% Very Low Income Households; (b) Sixteen (16) two- bedroom units, Two (2) of which shall be occupied by 30% Extremely Low Income Households, One (1) of which shall be occupied by 50% Very Low Income Households, and Thirteen (13) of which shall be occupied by 60% Low Income Households; and (c) Fourteen (14) three-bedroom units, Two (2) of which shall be occupied by 30% Extremely Low Income Households, and Three (3) of which shall be occupied by 60% Low Income Households, and Two (2) of which shall be occupied by 70% Low Income Households, and Six (6) of which shall be occupied by 80% Low Income Households, and One (1) which shall be a Manager’s Unit which is exempt from income/tenancy restrictions or other affordability requirements.
1.21 “Project” shall mean the demolition of the existing improvements on the Site, the grading of the Site and the development on the Site of a 50-unit apartment project with landscaping, driveways, and related improvements, and all other on-site and off-site improvements required for development, with all improvements to be consistent with the development and building plans and permits to be approved by City. In the event of any inconsistency between the description of the Project in this Agreement and the approved plans and permits, the approved plans and permits shall govern.
1.22 “Project Budget” shall mean the cost estimates for Borrower’s development of the Project set forth in Attachment No. 3 to this Agreement. The Project Budget may not be materially changed without the prior written approval of City (a material change is a change that causes the total Project costs to increase or decrease from what is shown in the Project Budget or that causes any line item in the Project Budget to increase or decrease by more than 10%). Any changes to the Project Budget, whether or not requiring the approval of City, shall be submitted to City. If the Project Budget is revised as permitted herein, all references herein to the “Project Budget” shall be deemed to refer to the revised Project Budget.
1.23 “Regulatory Agreement” shall mean the Regulatory Agreement between City and Borrower regulating the operation and of the Site, in the form attached hereto as Attachment No.
6. 1.24 “Schedule of Performance” shall mean that certain Schedule of Performance attached hereto as Attachment No. 2 setting out the dates and/or time periods by which certain obligations set forth in this Agreement must be performed.
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1.25 “Site” or “Property” shall mean that certain real property located in the City of Lake Forest, more particularly described in the legal description attached hereto as Attachment No. 1.
1.26 “Tax Credit Allocation Date” shall mean the date that Borrower secures approval by TCAC of an allocation of tax credits pursuant to the terms set forth in Section 2.9.2(a) of this Agreement.
1.27 “TCAC” shall mean the California Tax Credit Allocation Committee.
1.28 “30% Very Low Income Households” shall mean households earning not greater than thirty percent (30%) of the Area Median Income for Orange County.
1.29 “40% Very Low Income Households” shall mean households earning not greater than forty percent (40%) of the Area Median Income for Orange County.
1.30 “50% Very Low Income Households” shall mean households earning not greater than fifty percent (50%) of the Area Median Income for Orange County.
1.31 “60% Low Income Households” shall mean households earning not greater than sixty percent (60%) of the Area Median Income for Orange County.
1.32 “70% Low Income Households” shall mean households earning not greater than seventy percent (70%) of the Area Median Income for Orange County.
1.33 “80% Low Income Households” shall mean households earning not greater than eighty percent (80%) of the Area Median Income for Orange County.
2. FINANCING.
2.1 Amount and Source of City Loan. In order to assist in the development of affordable rental housing within the territorial limits of the City, City shall, subject to the terms and conditions set forth herein, and provided Borrower is not in default of this Agreement, provide Borrower financial assistance in the form of a loan not to exceed the sum of Four Million Three Hundred Fifty Thousand Dollars ($4,350,000) (the “City Loan”). The City Loan has two funding sources:
(1) Three Million Seven Hundred Thousand Dollars ($3,700,000) is in-lieu fees received by the City under City’s Developer fund affordable housing program and 2) Six Hundred Fifty Thousand Dollars ($650,000) funded by the Housing Authority Low and Moderate Income Housing Asset Fund.
(a) Limitation on Funding Use. Borrower is expressly limited on the use of the funding received through the Housing Authority Low and Moderate Income Housing Asset Fund to funding the construction of the units reserved for 30% Low Income Households. Any other use of these funds is expressly prohibited.
2.2 Cost Reductions or Increases. The parties acknowledge and agree that the City Loan is intended to partially finance the financing “gap” of the Project (the amount needed to pay the excess of the “Total Development Costs,” as defined herein, over the financing and other funding sources available to Borrower for construction of the Project) but in no event to provide funding ATTACHMENT 2
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(when combined with all other sources of financing and other funding sources available to Borrower for construction of the Project) in excess of the Total Development Costs. The term “Total Development Costs” shall mean the total cost set forth in the Borrower’s Pro Forma (Attachment No. 7) for the items in the Pro Forma under the headings Sources and Uses of Funds (the “Development Items”). The Total Development Costs as of the Effective Date is the sum of $43,228,490.00. The parties acknowledge, however, that there may be revisions to anticipated Project costs after the Effective Date. Accordingly, for purposes of calculating the Total Development Costs, the cost figures for the Development Items shall be those in the Project Budget or Borrower’s Pro Forma, as applicable, which are approved by or accepted by, as applicable, the City in connection with Borrower’s submittal of its evidence of financial capability to develop the Project pursuant to Section 2.8 of this Agreement. The term “ Actual Development Costs” shall mean the actual and reasonable expenses incurred by Borrower for the Development Items. If at the time permanent financing for the Project closes the Actual Development Costs exceed the sum of all financing and other funding sources available to Borrower for construction of the Project (the difference being a “Project Deficit”), Borrower shall be solely responsible for causing payment (through third party financing or other funds) of the Project Deficit. If at the time permanent financing for the Project closes the Actual Development Costs are less than the sum of the financing and other funding sources available to Borrower for construction of the Project (the difference being a “Project Surplus”), then the Project Surplus shall be applied first to pay any Deferred Developer Fee existing at the time of the close of permanent financing, excluding the $100 in capital contribution to the Project described in Section 1.9, and then to reduce or repay the City Loan, unless otherwise required by other project funding sources.
2.3 Permissible Use of City Loan; Eligible Loan Expenses. Pursuant to all of the terms and conditions of this Agreement, Borrower covenants, promises, and guarantees that any dispersed City Loan proceeds shall be used only for the Eligible Loan Expenses that are actually and reasonably incurred by Borrower directly related and necessary to the construction of the Project, and for no other purpose.
2.4 City Loan Funding Conditions. Notwithstanding any other provision of this Agreement to the contrary, City shall have no obligation to disburse any of the City Loan proceeds to Borrower unless all of the following conditions (collectively the “Funding Conditions”) are satisfied:
(a) Execution and Delivery of Documents. Borrower shall have executed and delivered to City the documents referred to in Section 2.7 of this Agreement. (b) City Title Policy. Fidelity National Title Company with offices at 4210 Riverwalk Parkway, Suite 100 Riverside, California 92505 or such other title company approved by City (the "Title Company") is irrevocably committed to issue to City an ALTA lender’s policy of title insurance (the “City Title Policy”), with liability in the amount of the City Loan, showing fee title to the Site vested in Borrower, insuring in favor of City the Deed of Trust, subject only to (i) the standard printed exceptions and exclusions contained in the form of the Title Policy commonly used by Title Company; (ii) non-delinquent property taxes and assessments; and (iii) such other matters as may be approved by City in its sole and absolute discretion. The Parties anticipate (x) that the City Title Policy will show the lien of the Deed of Trust in second priority, junior only to the lien securing the financing supplied by the construction (and permanent) lender, ATTACHMENT 2
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and (y) that the lien of the City’s Regulatory Agreement will be senior in priority to the lien securing the construction (and permanent) lender except as provided in Section 2.9.3 hereof.
Borrower shall pay the premium for the City Title Policy. (c) Permits and Approvals. Borrower shall have timely obtained all land use approvals and entitlements for the Project and shall have timely obtained approval of its final grading plans and building plans for the Project and grading permits and building permits shall be ready to be issued.
(d) Subordination Agreement. City shall have approved the form of any subordination agreements.
(e) Insurance. Borrower shall have provided to City evidence of the insurance required under Section 3.10 of this Agreement.
(f) Financial Capability. Borrower shall have received binding loan commitments for loans as required to fund the Project with commercially reasonable terms, including, without limitation, a binding reservation of federal low-income 4% or 9% housing tax credits pursuant to Section 42 of the Internal Revenue Code of 1986, as amended and a private activity bond. In addition, City shall have approved Borrower’s evidence of financial capability to develop the Project in accordance with Section 2.8 of this Agreement. (g) No Default. Borrower shall not be in default of any of its obligations set forth in this Agreement, and there shall be no event which, with the passage of time or the giving of notice, would constitute a default.
In the event that all of the Funding Conditions are not satisfied on or before the date that is the earlier of (i) the date that is 180 days after the Tax Credit Allocation Date, or such earlier time period as provided for herein, or such later deadline as may be mutually approved in writing by City and Borrower in the sole and absolute discretion of each of them, either party not in default may terminate this Agreement by delivering written notice to the other party. No termination under this Agreement shall release either party then in default from liability for such default.
2.5 Disbursements of City Loan. Provided Borrower is not in default of this Agreement, has executed and delivered and recorded all necessary documents including the documents listed in Section 2.7, after the Funding Conditions Satisfaction Date City shall disburse the City Loan proceeds to or for the benefit of Borrower. The Parties accept that the City will fund the entire amount of the City Loan into the escrow opened to facilitate closing of the construction loan; the City must authorize the escrow to wire the City’s funds to the construction lender at the close of the escrow, for disbursement by the construction lender in accordance with its agreement with the City. City agrees that the proceeds of the City Loan will be disbursed by the construction lender in full prior to the disbursement of any of the construction lender’s construction loan proceeds as “up front” funding for the payment of the construction costs of the Project. City’s obligation to make disbursements of the City Loan proceeds to Borrower shall be contingent and conditional upon Borrower's continuing satisfaction and the timely performance of all of its obligations under this Agreement. The Borrower is not required to pre-pay any construction costs and submit ATTACHMENT 2
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invoices for reimbursement from the City. However, the Borrower covenants that the Borrower shall not use any disbursement of City Loan proceeds for non-Eligible Loan Expenses. Within thirty (30) calendar days of the issuance of the Certificate of Completion, the Borrower shall submit to the City a reconciliation of all invoices paid using City Loan proceeds. The City shall then audit the invoices to determine if the costs included in the invoices are in fact Eligible Loan Expenses. The City in its sole and ultimate discretion will either (i) approve the invoices in total and thus the total City Loan amount, or (ii) reject in whole or in part certain invoices that either fail to properly evidence their associated costs to the satisfaction of the City or invoices that fail to prove, to the satisfaction of the City, that they comply as an Eligible Loan Expense. In the event of the City’s rejection under subparagraph (ii), the City will give written notice to Borrower detailing its objections to all rejected invoices and Borrower will have 15 days to provide any additional data which it may have to support or clarify any or all of the rejected invoices. The City may, in its discretion, after review of such addition data, notify Borrower that it has reclassified an invoice as an Eligible Loan Expense, or that an invoice remains rejected. The value of any invoices that are reject by the City for any reason shall not be included as part of the City Loan and any City Loan proceeds associated with those rejected invoices shall be due to the City from the Borrower immediately upon notice to the Borrower of their rejection.
2.6 Repayment of City Loan; Deed of Trust. Borrower’s obligation to repay the City Loan shall be as set forth in the City Note. The City Note generally provides for Borrower to pay to City a percentage of the cash flow (defined therein as “Residual Receipts”) generated from operation of the Project. Borrower’s obligation to repay the City Loan will be secured by the Deed of Trust. The Deed of Trust contains an acceleration clause which generally provides that, to the extent permitted by law, in the event Borrower shall (a) directly or indirectly, voluntarily or involuntarily, sell, assign, transfer, dispose of, alienate, encumber, lease, or agree to sell, assign, transfer, dispose of, alienate, encumber, or lease all or any portion of any interest in the Site, excluding the lease of the units on the Site in accordance with the Regulatory Agreement, the lien of the Permitted Encumbrances, transfers in connection with the syndication of tax credits awarded to the Project, and any other assignment, transfer, or encumbrance approved in writing by City; or (b) refinance any lien or encumbrance which has priority over the Deed of Trust for a loan amount in excess of the then outstanding sum secured by such lien or encumbrance together with the reasonable cost of such refinancing or further encumber the Site; or (c) default on any of its obligations set forth in this Agreement, the City Note, the Deed of Trust or the Regulatory Agreement or on any obligations under any documents relating to any other financing that is secured by the Site, and fail to cure the default within the applicable cure period, then, or at any time thereafter, City, at its option, may declare the entire indebtedness evidenced by the City Note secured by the Deed of Trust immediately due and payable and collectible then or thereafter as City may elect, regardless of the date of maturity.
2.7 Execution and Delivery of Documents. No later than five (5) days after the date the Funding Conditions in subparagraphs (b)-(g) in Section 2.3 are satisfied, Borrower shall deliver to City the following documents: (a) the City Note, executed by Borrower; (b) the Deed of Trust, executed and acknowledged by Borrower; and (c) the Regulatory Agreement, executed and acknowledged by Borrower. No later than the Funding Conditions Satisfaction Date and prior to City’s disbursement of any City Loan proceeds to Borrower, City shall execute the Regulatory Agreement and shall cause the Regulatory Agreement and the Deed of Trust to be recorded in the Official Records of Orange County, California.
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2.8 Borrower's Evidence of Financial Capability. Within the time set forth in the Schedule of Performance, Borrower shall submit to City's Community Development Director evidence reasonably satisfactory to the Community Development Director that Borrower has the financial capability necessary for the development of the Project pursuant to this Agreement. Such evidence of financial capability shall include all of the following:
(a) Any changes to the Project Budget.
(b) A copy of the commitment or commitments obtained by Borrower for all of the sources of funds to finance construction of the Project. All copies of commitments submitted by Borrower to City shall be certified by Borrower to be true and correct copies thereof.
Each commitment for financing shall be in such form and content acceptable to City's Community Development Director to reasonably evidence a firm and enforceable commitment, with only those conditions which are standard or typical for the lender involved for similar projects. (c) If the total costs set forth in the Project Budget exceed the amount of financing commitments received pursuant to subparagraph (b) above, a financial statement and/or other documentation (“pro forma statement”) reasonably satisfactory to the Community Development Director sufficient to demonstrate that Borrower has adequate funds available and committed to cover such difference. The Parties acknowledge one common means of ensuring adequate funds and one method Developer may utilize to demonstrate adequate funds for Project includes deferring payment of a portion of the Developer’s Fee beyond what was identified in Borrower’s Pro Forma, so that the deferred portion (the “Deferred Developer Fee”) is paid from proceeds produced from operation of the Project.
(d) A copy of the guaranteed maximum price construction contract between Borrower and its general contractor for all of the improvements required to be constructed by Borrower hereunder, certified by Borrower to be a true and correct copy thereof. (e) A corporate surety bond or bonds or other security instrument (such as a letter of credit), approved as to form, content and company by City’s City Manager or designee and the City Attorney, with Borrower’s contractor or contractors as principal(s), in a penal sum not less than 100% of the amount of the cost of constructing the Project guaranteeing completion of construction and payment of wages for services engaged and bills contracted for materials, supplies and equipment used in the performance of the work, and protecting Borrower and City from any liability, losses or damages arising therefrom. If the lenders providing construction financing to the Borrower do not require and will waive the provision of payment and performance bonds, then in lieu of providing payment and performance bonds to the City, Borrower may provide a completion guaranty from National Community Renaissance of California, in such form as reasonably required by the City’s Community Development Director and the City Attorney, guarantying the lien-free completion of the Project in accordance with this Agreement. Should the City request the same, the Borrower shall provide financial statements of National Community Renaissance of California to the City as evidence of its financial capacity to provide such completion guaranty to protect the City. Notwithstanding the foregoing, if the construction lender accepts an unsecured completion/payment guaranty, in lieu of the afore referenced secured bonds, from Borrower, the City may, in its sole discretion also accept such unsecured completion/payment guaranty.
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(f) The amount of any Deferred Developer Fee if Borrower is required to defer full payment of the Developer Fee from closing or equity payments in order to provide funds to pay a projected Project Deficit.
The City Manager, or his or her designee, in consultation with the Director of Finance/City Treasurer, shall complete its review of and approve or disapprove Borrower's evidence of financial capability within 14 days after a complete submittal. Notwithstanding the foregoing, City acknowledges that due to circumstances outside of Borrower’s control the period between Borrower’s submittal of its evidence of financial capability and the closing of the financing for the Project may be less than fourteen (14) days and, in such event, City shall cooperate with Borrower in reviewing the evidence of financial capability submitted by Borrower as expeditiously as possible. If the Community Development Director shall disapprove such evidence of financing, he or she shall do so by written notice to Borrower stating the reasons for such disapproval. In such event, Borrower shall promptly resubmit its evidence of financial capability not less than fourteen (14) days after receipt of the Community Development Director’s disapproval, the Community Development Director shall reconsider such resubmittal within the same number of days allowed for the initial submittal, and the deadlines in the Schedule of Performance shall be extended accordingly.
2.9 Additional Financing.
2.9.1 Permitted Encumbrances. Mortgages, deeds of trust, conveyances, and leases-back or any other form of conveyance required for any reasonable method of financing shall be permitted on the terms set forth herein, but only for the purpose of securing loans of funds to be used for the acquisition, construction, development and operation of the Project, underwritten by a reputable financial institution(s) or governmental entity(ies) that has a prior, known history of financing affordable housing projects similar to the Project (the “Permitted Encumbrances”).
Borrower shall not enter into any such conveyance for financing purposes without the prior written consent of City, which consent shall be given if such conveyance is for the purposes permitted herein and is made by a financial or lending institution, governmental agency or other acceptable person or entity capable of performing or causing to be performed Borrower’s obligations under this Agreement.
2.9.2 Funding Sources. From and after the date of this Agreement, Borrower shall exercise commercially reasonable efforts to obtain financing for the development of the Project. Borrower intends to utilize financing from a variety of sources for the Project. The anticipated sources for construction and permanent financing are described below:
(a) Tax Credit Equity.
(b) Construction Loan.
(c) Permanent Loan.
(d) Orange County Housing Finance Trust Loan
(e) Project Based Vouchers
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City acknowledges that the sources of funding set forth in this Section 2.9.2 are anticipated sources and that the actual sources may change due to circumstances outside the control of Borrower. Borrower shall coordinate with City any changes to the proposed sources of funding for the Project and shall otherwise keep City informed of Borrower’s efforts to obtain financing and its progress with respect thereto. If a permitted lender or tax credit investor should, as a condition of providing funding for the Project, request any modification of this Agreement in order to protect its interests in the Project or this Agreement, City shall consider such request in good faith consistent with the purpose and intent of this Agreement and the rights and obligations of the parties under this Agreement. The City Manager shall have the authority to approve revisions to the terms of this Agreement requested by such lender or investor.
2.9.3 Subordination. The City Manager shall have the authority to execute and deliver subordination agreements as he or she determines are commercially reasonable and consistent with the provisions, purpose and effect of this Agreement. City agrees it will subordinate the Deed of Trust to the financing referred to in Sections 2.9.2 (b), (c), & (f). Nothing herein shall obligate City to subordinate its Deed of Trust to any other financing. In connection therewith, the Regulatory Agreement implements the affordability requirements imposed under the entitlements and must be senior to all financing unless otherwise agreed to by City Manager or designee.
2.9.4 Notice of Default to Construction Lender; Right to Cure. Whenever City shall deliver any notice or demand to Borrower with respect to any default by Borrower under this Agreement, City shall at the same time deliver a copy of such notice or demand to any lender that has provided City written request for such notice or demand. The other lenders for the Project shall (insofar as the rights of City are concerned) have the right, within ninety (90) days after receipt of the notice, to cure or remedy any such default and any such cure or remedy will be accepted by City as if it had been performed by Borrower.
2.9.5 Right of the City to Cure Mortgage or Deed of Trust Default. In the event of a mortgage or deed of trust default or breach by the Borrower, Borrower shall promptly deliver to City a copy of any notice of default or breach received from any other lender and City may cure the default without acceleration of the subject loan following prior notice thereof to the Borrower.
In such event, Borrower shall be liable for, and City shall be entitled to reimbursement from Borrower within ten (10) days of written demand all costs and expenses associated with and attributable to the curing of the mortgage or deed of trust default, including any default consisting of a breach of this Agreement by the Borrower, which are incurred by City. Any sums which become due to City from Borrower under the provisions of this Section 2.9.5 shall constitute a lien on the Site, effective upon recordation by City or City’s authorized agent of a notice of lien (the “Notice of Lien”) concerning nonpayment of any sum due hereunder. The Notice of Lien shall state (i) the amount due, which amount shall include interest at the rate of 10% from the date due to the date paid, and shall also include the cost of preparing and recording the Notice of Lien, (ii) the expenses of collection in connection with any nonpayment, including without limitation reasonable attorneys’ fees, (iii) a description of the Site, (iv) the name and address of City, (v) the name of Borrower, and (vi) in order for the lien to be enforced by nonjudicial foreclosure, the name and address of the trustee authorized by City to enforce the lien by sale. The lien established pursuant to this section may be enforced by sale of the Site by City, City’s attorneys, any title insurance company authorized to do business in California, or other persons authorized to conduct ATTACHMENT 2
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the sale as a trustee, after failure of Borrower to pay any sum due pursuant to this Agreement within 30 days after recordation of the Notice of Lien. The sale shall be conducted in accordance with the provisions of the California Civil Code applicable to the exercise of powers of sale in mortgages and deeds of trust, or in any other manner permitted by law. City, through its agents, shall have the power to bid on the Site at the foreclosure sale, and to acquire and hold, lease, mortgage and convey the same. Suit to recover a money judgment for any amounts due under this Agreement shall be maintainable without foreclosing or waiving any lien securing the same, but this provision or any institution of suit to recover a money judgment shall not constitute an affirmation of the adequacy of money damages. Any recovery resulting from a suit at law or in equity initiated pursuant to this Section shall include reasonable attorneys’ fees as fixed by the court. Notwithstanding the foregoing, after the City has issued its Certificate of Completion the non-recourse provisions of Section 12 of the Note shall be deemed to apply to the City’s remedies hereunder.
3. DEVELOPMENT OF THE PROJECT.
3.1 Scope of Development. The Project shall consist of the demolition of the existing improvements on the Site in accordance with plans approved by the City, the grading of the Site, and the development on the Site of an income-qualified rental project with parking, landscaping, lighting, signage, and other amenities, and all other on-site and off-site improvements required for development of the Site, with all such improvements to be first class in architectural design and quality consistent with the development and building plans and permits to be approved by City (provided, however, that nothing herein shall represent, warrant, or guarantee that City shall approve any of such plans and permits). The Project shall provide for a maximum of fifteen (15) the total units to be set aside for permanent supportive housing (unless modified with prior approval of the city).
3.2 Policing Center. The project will include a dedicated office space for the Orange County Sheriff’s Department, to be used exclusively for any and all purposes as deemed necessary or convenient by the department, in perpetuity, unless the City elects, in its sole and exclusive discretion, to permit Borrower to use this office space for some other permitted use. This office may be occupied by the City’s police department or any other police department contracted by the City to provide law enforcement services. The office will be equipped with a restroom, a desk, and will have direct exterior access. The room shall measure approximately 132 square feet in size.
3.3 Development Standards. Borrower agrees to design a project that meets all applicable development standards in the Lake Forest Municipal Code (the “LFMC”), in addition to Borrower-requested incentives, described below:
3.3.1 Distance to Parking Stall
(a) Developer is requesting an incentive to waive the required 200’ distance from units to parking stall (LFMC Section 9.168.040(E)).
3.3.2 Open Space
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(a) Developer is requesting an incentive with a reduction of the minimum private and common open space from 15,000 SF to 12,747 SF (LFMC Section 9.73.030(C)).
3.3.3 Indoor Trash Drop Stations
(a) Developer is requesting an incentive to waive the required trash drop stations inside residential buildings. Trash drop stations are proposed outside within enclosed areas accessible to all dwelling units and to trash pickup trucks. Zoning Code Section
9.73.063(J)(2).
3.3.4 Indoor Mailboxes
(a) Developer is requesting an incentive to waive the required indoor mailboxes and refrigerated lockers within the residential building's ground floor. A mailbox station is provided outside. Zoning Code Section 9.73.063(J)(6)
3.3.5 All other applicable provisions for Mixed Use-43 projects in the LFMC shall apply, including without limitation Chapters 9.144 and 9.146.
3.4 No Commitment to Development. The parties agree that nothing in this Agreement is intended to commit the Borrower to complete a particular project or to commit the City to grant any approval. The City's approval of this Agreement does not constitute approval by the City of any development of the Project or of other activity on the Site that would have a direct or reasonably foreseeable indirect environmental impact pursuant to CEQA. (See 14 C.C.R. §§ 15060(c); 15378(b).) Moreover, Borrower’s future use or development of the Site is expressly conditioned upon any applicable CEQA compliance. City shall conduct environmental review in accordance with CEQA prior to taking any discretionary action with regard to any proposed development of the Site. Nothing in this Agreement shall be construed to limit the City’s discretion to consider and adopt any mitigation measure or project alternative, including the alternative of rejecting any proposed development of the Site, as provided in Public Resources Code section 21002. Following completion of the City's environmental review of any proposed development of the Site, the City shall file a notice of such approval as provided in Public Resources Code section 21152.
3.5 Future Proposals Subject to Review. Borrower and City shall work together to conduct environmental review in accordance with CEQA before City takes action on any plan or entitlement. The Parties agree and acknowledge that any proposed development of the Site might change as a result of various environmental factors. The scope and location of proposed development and the design of the anticipated improvements might well change to account for needs of Borrower, including changes required by any applicable CEQA process.
3.6 Community Outreach. The Borrower conducted two (2) community workshops. The first meeting was held at Forest Gardens Mobile Home Park located at 24001 Muirlands Blvd, Lake Forest, California 92630. The second was held at Mountain View located at 24551 Raymond Way. The community workshops were designed to encourage community feedback on all aspects ATTACHMENT 2
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of the project including site design, parking, traffic, landscaping, programming, tenancy, and management. The Borrower prepared and provide draft documents and presentations to City staff in advance of the meeting for review and comment.
3.7 Final Plans. Within the time set forth in the Schedule of Performance, Borrower shall submit to City for review and approval a complete set of final plans and specifications for the Project (the “final plans”). The final plans and drawings shall contain all information required to obtain all necessary demolition, grading and building permits required for the Project. City shall exercise reasonable diligence to complete its review of the final plans within forty-five (45) days after a complete submittal. Any disapproval shall be in writing and shall state the reasons therefor.
Upon receipt of a disapproval, Borrower shall, within twenty (20) days, revise or correct the final plans as necessary to conform to City requirements. The same procedures and requirements shall apply to subsequent submittals and reviews until the final plans are finally approved by City.
3.8 Schedule of Performance. Subject to the force majeure provisions of Section 7.9, Borrower shall commence, prosecute, and complete construction of the Project within the time set forth in the Schedule of Performance. Construction shall be continuously and diligently pursued to completion and shall not be abandoned for more than ten (10) consecutive days, except when due to causes beyond the control and without the fault of Borrower, as set forth in Section 7.9 of this Agreement. During the course of construction, Borrower shall, if requested by City, provide to City monthly written reports on the progress of construction. Pursuant to the Schedule of Performance, Developer shall apply for the City to issue a Certificate of Completion (Attachment No. 8), which the City will sign and deliver to Borrower if construction of the Project has been fully and finally completed by Borrower in compliance with the provisions of this Agreement and the City has issued certificates of occupancy for all units in the Project. Issuance by the City of a Certificate of Completion shall be deemed to constitute a termination of this Agreement, which will have no effect thereafter.
3.9 Compliance with Permits and Laws. Borrower shall carry out the design, construction and operation of the Project in conformity with this Section 3 and all applicable federal, state, and local laws, including the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the Lake Forest Municipal Code, all applicable disabled and handicapped access requirements, and all environmental mitigation measures imposed as conditions of approval of the Project. In addition, Borrower shall carry out the construction of the Project and the development of the Site in conformity with all applicable federal and state labor laws, including, without limitation, any requirement under either the Davis-Bacon Act to pay prevailing wage rates in effect for the area of the Project as set by the U.S. Department of Labor or under California law to pay prevailing wages and hire apprentices.
With respect to Borrower’s redevelopment of the Site and construction of the Project, Borrower acknowledges and agrees that it shall be required to, and shall be required to cause all of its contractors and their contractors to, pay prevailing wages as, and if, applicable to the Project, in compliance with California Labor Code Section 1720 et seq., and shall be responsible for the keeping of all records which might be required pursuant to Labor Code Section 1770 et seq., including but not limited to Labor Code Section 1776, and complying with the maximum hours requirements of Labor Code Sections 1810 through 1815, if applicable, and complying with all applicable regulations and statutory requirements pertaining thereto. Borrower acknowledges and agrees that it shall be independently responsible for reviewing the applicable laws and regulations ATTACHMENT 2
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with respect to the payment of prevailing wages and complying therewith if and as applicable.
Upon any request by City, Borrower shall provide a true and correct copy of such payroll records as are required under applicable law. In addition to any other Borrower indemnifications of City set forth in this Agreement, Borrower shall indemnify, defend, and hold City and its officers, officials, members, employees, agents, representatives, and volunteers harmless from and against any liability, loss, damage, cost or expenses (including but not limited to reasonable attorneys’ fees, expert witness fees, court costs, and costs incurred related to any inquiries or proceedings) arising from or related to (a) the noncompliance by Borrower of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages and hire apprentices); (b) the implementation of Section 1781 of the Labor Code, as the same may be amended from time to time, or any other similar law; and/or (c) failure by Borrower to provide any required disclosure or identification as required by Labor Code Section 1781, as the same may be amended from time to time, or any other similar law. It is agreed by the parties that, in connection with the development and construction (as defined by applicable law) of the Project, including, without limitation, any and all public works (as defined by applicable law), Borrower shall bear all risks of payment or non-payment of prevailing wages under California law and/or the implementation of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. “Increased costs,” as used in this Section 3.9, shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be amended from time to time. The foregoing indemnity shall survive termination of this Agreement and shall continue after completion of the construction and development of the Project by Borrower. Borrower shall be solely responsible for determining and effectuating compliance with such laws. Borrower hereby expressly acknowledges and agrees that City has not previously affirmatively represented to Borrower or its contractor(s) for the construction or development of the Project, in writing or otherwise, in a call for bids or otherwise, that the work to be covered by this Agreement is not a “public work,” as defined in Section 1720 of the Labor Code.
3.10 Insurance. Borrower shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to City, during the entire term of this Agreement, duplicate originals or appropriate endorsements of commercial general liability insurance policies in the amount of at least Two Million Dollars ($2,000,000) combined single limit, naming City and its officers, employees, and agents as additional insureds or co-insureds. Borrower shall also furnish or cause to be furnished to City evidence of builder’s risk coverage written on a completed value basis in an amount equal to the full replacement cost of the improvements with coverage available on the so-called non-reporting “all risk” form of policy, including coverage against collapse, fire, and water damage, with such insurance to be in such amounts and form and written by such companies as shall be approved by City. Such policy shall name City as a loss payee. The foregoing insurance policies:
(a) shall be primary insurance and not contributory with any other insurance which City may have;
(b) shall contain no special limitations on the scope of protection afforded to City and its officers, employees, agents, and representatives;
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(c) shall be “date of occurrence” and not “claims made” insurance; (d) shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability;
(e) shall provide that the policy will not be cancelled by the insurer or Borrower unless there is a minimum of thirty (30) days prior written notice to City;
(f) shall be written by a good and solvent insurer admitted in California and registered with the California State Department of Insurance; and
(g) shall be endorsed to state that any failure to comply with the reporting provisions of the policies shall not affect coverage provided to City.
Borrower shall also furnish or cause to be furnished to City evidence reasonably satisfactory to City that Borrower’s Contractor carries workers’ compensation insurance as required by law.
Borrower agrees that the provisions of this Section 3.10 shall not be construed as limiting in any way the extent to which Borrower may be held responsible for the payment of damages to any persons or property resulting from Borrower’s activities or the activities of any person or persons for which Borrower is otherwise responsible. No later than ten (10) days after the Effective Date, Borrower shall provide evidence of the above-required insurance (such as Certificates of Insurance of appropriate insurance binders) and obtain approval thereof from City, which approval shall not be unreasonably withheld or delayed and may be waived in City’s sole and absolute discretion. Evidence of builder’s risk coverage may be provided after Borrower receives all necessary construction financing.
3.11 Right of Access. City and its officers, officials, employees, agents and representatives shall have the right of access to the Site, upon reasonable prior written notice, without charges or fees, for the purposes of this Agreement, including but not limited to, the inspection of the work being performed in constructing the Project, so long as City representatives comply with all safety rules and do not interfere with, delay or interrupt Borrower’s construction activities. It is understood that City does not by this right of access assume any responsibility or liability for a negligent inspection or failure to inspect.
3.12 Borrower Responsible for Cost of Development. Except to the extent City has specifically agreed to provide the City Loan pursuant to Section 2, Borrower shall be responsible for all costs of developing the Project, including but not limited to predevelopment costs incurred for items such as planning, design, engineering, and environmental remediation; all development and building fees; the cost incurred to demolish and clear any and all existing improvements, furnishings, fixtures, and equipment from the Site requiring removal; relocation expenses payable to occupants of the Site as required; costs for insurance and bonds (as required); costs for financing; all on-site construction costs; costs for any necessary public improvements; and legal fees.
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3.13 Indemnity. Borrower shall defend, indemnify, assume all responsibility for, and hold City and their officers, officials, members, employees, agents, representatives, and volunteers, harmless from all claims, demands, damages, defense costs or liability of any kind or nature relating to (a) any damages to property or death or injuries to persons (including reasonable attorneys’ fees and costs and expert witness fees), which may be caused by any acts or omissions of Borrower under this Agreement, whether such activities or performance of this Agreement be by Borrower or by anyone directly or indirectly employed or contracted with by Borrower and whether such damage shall accrue or be discovered before or after termination of this Agreement, except to the extent such matters are caused by the active negligence or willful misconduct of City or its officers, officials, members, employees, agents, representatives, or volunteers acting in an official capacity, or (b) any litigation, administrative or adjudicative challenge by third parties to the validity, applicability, interpretation or implementation of this Agreement, or the certification or approval of the environmental document(s) with respect to the Project and this Agreement, (c) any default of this Agreement by Borrower, or (d) any activities or conditions in, on or under the Site.
3.14 Prevailing Wage.
3.14.1 RESPONSIBILITY. BORROWER SHALL ASSUME ANY AND ALL
RESPONSIBILITY AND BE SOLELY RESPONSIBLE FOR DETERMINING WHETHER OR
NOT LABORERS EMPLOYED RELATIVE TO THE PROJECT WORK MUST BE PAID THE
PREVAILING PER DIEM WAGE RATE FOR THEIR LABOR CLASSIFICATION AND THE
APPLICABLE PREVAILING PER DIEM WAGE RATE PURSUANT TO EITHER THE DAVIS-BACON ACT (40 U.S.C. §§ 3141 ET SEQ.) OR LABOR CODE SECTIONS 1720 ET SEQ., AS APPLICABLE.
3.14.2 WAIVERS AND RELEASES . BORROWER, ON BEHALF OF
ITSELF, ITS SUCCESSORS, AND ASSIGNS, WAIVES AND RELEASES CITY FROM ANY
RIGHT OF ACTION THAT MAY BE AVAILABLE TO DEVELOPER PURSUANT TO LABOR CODE SECTION 1781 OR THE DAVIS-BACON ACT. RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS SECTION 3.10.2, BORROWER ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SECTION 1542, WHICH READS AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
THAT THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE AND THAT, IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.
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3.14.3 INITIALS. BY INITIALING BELOW, BORROWER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF SECTION 3.9:
_________________
Initials of Authorized
BORROWER Representative
3.14.4 INDEMNITY. BORROWER SHALL INDEMNIFY CITY ,
PURSUANT TO SECTION 3.13, AGAINST ANY PREVAILING WAGE ACTIONS ARISING
FROM THIS AGREEMENT, THE DEMOLITION WORK OR THE CONSTRUCTION ASSOCIATED WITH THE PROJECT.
3.15 Relocation Indemnification. Borrower shall have the sole and exclusive responsibility for providing relocation assistance and paying all relocation costs required, as applicable, to comply with all applicable federal and state laws, rules, and regulations, including but not limited to the California Relocation Assistance Law, Government Code Section 7260, et seq., and the implementing regulations thereto codified in California Code of Regulations, Title 25, Chapter 6, Section 6000, et seq. (collectively, the “Relocation Laws”). Any relocation shall be performed in accordance with a relocation plan approved by City. Borrower shall indemnify, defend, and hold City harmless from and against any alleged or actual claims, liabilities, damages, remedies, causes of action, demands, or losses, and other liabilities made against them related to (1) the acquisition or the use of the Site by Borrower; (2) compliance with the Relocation Laws; (3) displacement or benefits owned to tenants on the Site including without limitation claims for relocation assistance and inverse condemnation; and (4) any other compensation of whatever kind or nature arising from current or prior occupancy or use of the Site, and/or any move, displacement, relocation therefrom.
4. USE OF SITE; AFFORDABILITY COVENANTS.
Borrower and its successors and assigns shall use, operate, and maintain the Site as an affordable rental housing project in accordance with the provisions of this Agreement and the Regulatory Agreement. The Regulatory Agreement provides that as all of the units in the Project except for the manager’s unit shall be rented to income-qualified tenants at Affordable Rents, as that term is defined herein and in the Regulatory Agreement, for a period of fifty-five (55) years.
Further, as provided in Section 3.2, one office within the Project shall be provided at no cost or liability to the police department for sole use by the police department for any and all purposes deemed necessary or convenient by the police department in perpetuity unless the City, in its discretion, authorizes a different use for this space. The police department shall either be the police department of the City or any police department that the City contracts with for police services.
The current Affordable Rent is as follows, but is subject to change pursuant to state law, as issued by the California Department of Housing and Community Development, or TCAC.
The following table is meant to be illustrative of Affordable Rent, however, Borrower is required to ensure applicable affordability restrictions follow the more restrictive limits based on funding sources.
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INCOME LIMIT
CATEGORY
BASED ON 2024
HCD INCOME
LIMITS
2 PERSON
HOUSEHOLD
4 PERSON
HOUSEHOLD
ONE
BEDROOM
TWO
BEDROOM
THREE
BEDROOM
Extremely Low
Housing (>30%
AMI)
$33,270 $41,610 $780 $936 $1,081
Very Low Income
(>40% AMI)
$44,360 $55,480 $1,040 $1,248 $1,442
Very Low Income
(>50% AMI)
$55,450 $69,360 $1,300 $1,560 $1,803
Low Income
(>60% AMI)
$66,540 $83,220 $1,560 $1,872 $2,163
Median Income
(>70% AMI)
$77,630 $97,090 $1,820 $2,184 $2,524
Moderate Income
(>80% AMI)
$88,720 $110,960 $2,080 $2,496 $2,885
5. OPERATING STANDARDS
5.1 Selection of Tenants. The City desires that the Project serve as many local residents and those working in the City as possible. To that end, the Borrower shall employ its best efforts to provide information to the City community regarding the availability of the units and provide guidance and instructions to interested local parties. Borrower shall be responsible for the selection of tenants for the units in compliance with this Agreement and consistent with the Prescribed Rent Levels and Tenant Mix. To the greatest extent legally allowable, preference will be afforded residents to the City and persons who are verifiably living or employed within City limits. Borrower shall conduct due diligence and background evaluation of all prospective tenants, including, without limitation, a criminal background check (as legally permissible) and third-party verification of income, to evaluate references, credit worthiness, and related qualifications.
5.2 Occupancy Limits. To the greatest extent allowed by law, the maximum occupancy of the units shall not exceed more than such number of persons as is equal to two persons per bedroom, plus one. Thus, for the one (1) bedroom units, the maximum occupancy shall not exceed three (3) persons. For the two (2) bedroom units, the maximum occupancy shall not exceed five (5) persons. For the three (3) bedroom units, the maximum occupancy shall not exceed seven (7) persons.
5.3 Income of Tenants. Each person or family qualifying to occupy one of the restricted units shall do so at the appropriate Affordable Rent, based on the most restrictive limits of Borrower’s funding sources, which meets the eligibility requirements established for the corresponding unit, and Borrower shall obtain a certification from each tenant renting or leasing each unit which substantiates such fact.
5.4 Property Manager. Borrower shall manage or cause the Project, and all appurtenances thereto that are a part of the Project, to be managed in a prudent and business-like ATTACHMENT 2
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manner, consistent with good property management standards for other comparable first quality, well-managed affordable rental housing projects in the County. Borrower may contract with a property management company or property manager, to operate and maintain the Project; provided, however, the selection and hiring of the Property Manager (and each successor or assignee), including any Affiliate, is and shall be subject to prior written approval of the City Manager (or designee) in his or her discretion. . National Community Renaissance of California shall be deemed to be an approved property management company. The Property Manager shall manage the Project in accordance with the definitions of Affordable Rent herein, the tenant selection requirements contained in Section 5.1, and the definitions relating to income contained in Section 5.3. Borrower shall conduct due diligence and background evaluation of any non- affiliated or potential third-party property manager or property management company to evaluate experience, references, credit worthiness, and related qualifications as a property manager. Any proposed property manager shall have significant and relevant prior experience with affordable housing projects and properties comparable to the Project and the references and credit record of such property manager/company shall be investigated (or caused to be investigated) by Borrower prior to submitting the name and qualifications of such proposed property manager to the City Manager for review and approval. A complete and true copy of the results of such background evaluation shall be provided to the City Manager. Approval of a Property Manager by the City Manager shall not be unreasonably delayed but shall be in his/her sole reasonable discretion, and the City Manager shall use good faith efforts to respond as promptly as practicable in order to facilitate effective and ongoing property management of the Project on either a temporary or permanent basis. The replacement of a Property Manager by Borrower and/or the selection by Borrower of any new or different Property Manager during the Affordability Period shall also be subject to the foregoing requirements, except in the case of temporary management by a lender or limited partner of Borrower, which shall be immediately submitted to City for approval and will not last longer than 30 days.
5.5 Property Management Plan. Within the time set forth in the Schedule of Performance, Borrower shall prepare and submit to the City Manager for review and approval, a management plan for the Project which must include (i) a detailed plan and strategy for long term marketing, operation, maintenance, repair and security of the Project, (ii) a description of social services for the residents of the units, (iii) on-site parking policies, (iv) the method of selection of tenants, (v) rules and regulations for tenants, and (vi) other rental policies for the Project (the “Property Management Plan”). The City Manager shall review and shall act reasonably to approve or disapprove the Property Management Plan within a reasonable time. The approval of the Property Management Plan is a necessary condition precedent to approval by City of Project building plans. Subsequent to approval of the Property Management Plan by the City Manager the ongoing management and operation of the Project shall be in compliance with the approved Property Management Plan. During the Affordability Period, Borrower and its Property Manager may from time to time submit to the City Manager proposed amendments to the Property Management Plan, the implementation of which shall also be subject to the prior written approval of the City Manager.
5.6 Code Enforcement. Borrower acknowledges and agrees that the City, and its employees and authorized agents, shall have the right to conduct code compliance and/or code enforcement inspections of the Project and the units, both exterior and interior, at reasonable times and upon reasonable notice (not less than forty-eight (48) hours’ prior notice, except in an ATTACHMENT 2
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emergency) to Borrower and/or an individual tenant. If such notice is provided by City representative(s) to Borrower, then Borrower (or its Property Manager) shall immediately and directly advise any affected tenant of such upcoming inspection and cause access to the area(s) and/or unit(s) at the Project to be made available and open for inspection. Borrower shall include express advisement of such inspection rights within the lease/rental agreements for each unit in the Project in order for each and every tenant and tenant household to be aware of this inspection right.
6. DEFAULTS AND REMEDIES.
6.1 Defaults-General. Failure or delay by either Party to perform any term or provision of this Agreement constitutes a default under this Agreement; provided, however, such Party shall not be deemed to be in default if (a) it cures, corrects, or remedies such default within thirty (30) days after receipt of a notice from the other Party specifying such failure or delay, or (b) for defaults that cannot reasonably be cured, corrected, or remedied within such time period, if such Party commences to cure, correct, or remedy such failure or delay within such time period after receipt of a notice from the other Party specifying such failure or delay, and diligently prosecutes such cure, correction or remedy to completion, within an additional sixty (60) days following the conclusion of such thirty (30) day period (for a total of ninety (90) days). The injured Party shall give written notice of default to the party in default, specifying the default complained of by the injured Party. Except as required to protect against further damages, the injured Party may not institute legal proceedings against the Party in default until the time for cure, correction, or remedy of a default has expired. Except as otherwise expressly provided in this Agreement, any failure or delay by a Party in giving a notice of default or in asserting any of its rights and remedies as to any default shall not constitute a waiver of any default, nor shall it change the time of default, nor shall it deprive such Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies.
6.2 Institution of Legal Actions. In addition to any other rights or remedies, either Party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purposes of this Agreement. Such legal actions must be instituted and maintained in the Superior Court of the County of Orange, State of California, or in any other appropriate court in that county.
6.3 Applicable Law. The internal laws of the State of California without regard to conflict of law principles shall govern the interpretation and enforcement of this Agreement.
6.4 Additional City Remedies. In addition to any other rights or remedies available at law or in equity, upon a default of Borrower , City may do any of the following: (a) refuse to advance all or any part of the City Loan; (b) wholly or partially suspend or terminate the award of the City Loan; (c) wholly or partially suspend or terminate this Agreement; and (d) require Borrower to repay any City Loan funds which City determines were not expended in compliance with the requirements of this Agreement. Upon the occurrence of an event which, with the passage of time or the giving of notice, would constitute a default of Borrower, City may temporarily withhold disbursement of City Loan proceeds pending correction of the default by Borrower.
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6.5 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party.
7. GENERAL PROVISIONS.
7.1 Attorneys’ Fees. If either party commences an action against the other party arising out of or in connection with this Agreement, the prevailing party shall be entitled to recover reasonable attorney’s fees and costs of suit from the losing party.
7.2 Notices. All notices to be delivered under this Agreement to the other party shall be addressed to the respective parties as set forth below or to such other address and to such other persons as the parties may hereafter designate by written notice to the other parties hereto:
To City:
City of Lake Forest
100 Civic Center Drive
Lake Forest, CA 92630
Attention: Debra Rose, City Manager
Facsimile: (949) 461-3410
Email: [email protected]
Copy to:
Best Best & Krieger LLP
18101 Von Karman Avenue, STE 1000
Irvine, CA 92612
Attention: Elizabeth Hull, Esq.
Facsimile: (949) 263-2608
Email: [email protected]
To Borrower:
National Community Renaissance of California
9692 Haven Avenue, Suite 100
Rancho Cucamonga, CA 91730
Email: [email protected]
Copy to:
Edward A. Hopson
655A North Mountain Avenue
Upland, CA 91786
Email: [email protected]
[email protected]
Notices personally delivered; delivered through the United States mail, by registered or certified mail, postage prepaid; by means of prepaid overnight delivery service; or by email are acceptable forms of notice. Notices shall be deemed given upon receipt in the case of personal delivery, two days after deposit in the mail, or the next business day in the case of email or overnight delivery. Such written notices, demands, and communications shall be sent in the same manner to such other addresses as any Party may from time to time designate in writing. Notices transmitted electronically which are sent after 5:00 p.m. on a business day or on a weekend or holiday shall be deemed received at 8:00 a.m. on the next successive business day unless the sender receives a notice that the transmittal could not be delivered to the intended recipient.
7.3 RESERVED
7.4 Binding on Heirs. This Agreement shall be binding upon the parties hereto and their respective heirs, representatives, transferees, successors, and assigns.
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7.5 Entire Agreement, Waivers, and Amendments. This Agreement incorporates all of the terms and conditions mentioned herein, or incidental hereto, and supersedes all negotiations and previous agreements between the parties with respect to all or part of the subject matter hereof.
All waivers of the provisions of this Agreement must be in writing and signed by the appropriate authorities of the party to be charged. Any amendment or modification to this Agreement must be in writing and executed by City and Borrower.
7.6 Interpretation; Governing Law. This Agreement shall be construed according to its fair meaning and as if prepared by both parties hereto. This Agreement shall be construed in accordance with the internal laws of the State of California.
7.7 Authority. The person(s) executing this Agreement on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said party, (iii) by so executing this Agreement, such party is formally bound to the provisions of this Agreement, and (iv) the entering into this Agreement does not violate any provision of any other agreement to which said party is bound.
7.8 Nonliability of City Officials and Employees. No member, official, employee, or contractor of City shall be personally liable to Borrower in the event of any default or breach by City or for any amount which may become due to Borrower or on any obligations under the terms of this Agreement.
7.9 Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement, and except as expressly set forth in this Section 7.9, performance by either party hereunder shall not be deemed to be in default and such party shall be entitled to an extension of time to perform its obligations hereunder where delays in performance are due to causes beyond the control and without the fault of such party, including as applicable: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of the public enemy; epidemics; quarantine restrictions; federal, state or local declarations of emergency; freight embargoes; lack of transportation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplies; acts of the other party; acts or the failure to act of City or any other public or governmental agency or entity (except that any act or failure to act of or by City shall not excuse performance by City). Notwithstanding the foregoing, Borrower’s inability to secure satisfactory financing, interest rates, and market and economic conditions shall not entitle Borrower to an extension of time to perform. An extension of time for any cause permitted under this Section 7.9 shall be limited to the period of the enforced delay, which period shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of knowledge of the commencement of the cause. If no written notice is sent within thirty (30) days, for purposes of measuring the extension period for performance of the obligation in question, the period of the enforced delay shall commence to run from the date written notice is sent to the other party.
Times of performance under this Agreement may be extended by mutual written agreement of City and Borrower.
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7.10 Severability. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of this Agreement shall not be affected thereby to the extent such remaining provisions are not rendered impractical to perform taking into consideration the purposes of this Agreement. In the event that all or any portion of this Agreement is found to be unenforceable, this Agreement or that portion which is found to be unenforceable shall be deemed to be a statement of intention by the parties; and the parties further agree that in such event, and to the maximum extent permitted by law, they shall take all steps necessary to comply with such procedures or requirements as may be necessary in order to make valid this Agreement or that portion which is found to be unenforceable.
7.11 Representations and Warranties. Borrower and each person executing this Agreement on behalf of Borrower represents and warrants that: (a) Borrower is a California corporation in good standing and authorized to do business in the County of Orange; (b) Borrower has all requisite power and authority to carry out its business as now and whenever conducted and to enter into and perform its obligations under this Agreement and the agreements attached to this Agreement; (c) by proper action of Borrower, Borrower’s signatories have been duly authorized to execute and deliver this Agreement; (d) the execution of this Agreement by Borrower does not violate any provision of any other agreement to which Borrower is a party; and (e) except as may be specifically set forth in this Agreement, no approvals or consents not heretofore obtained by Borrower are necessary in connection with the execution of this Agreement by Borrower or with the performance by Borrower of its obligations hereunder.
7.12 City Contract Administration. The City Manager for the City (or his or her authorized representative) shall administer this Agreement on behalf of City and shall have the authority to issue interpretations, waive provisions, extend deadlines, and enter into amendments of this Agreement on behalf of City so long as such actions do not substantially add to the costs of City as specified herein.
7.13 Plans, Drawings and Documents to be Assigned to City. If this Agreement is terminated for any reason other than an uncured material default by City hereunder, Borrower covenants to immediately assign and release to City any ownership rights and interest that Borrower may have in any and all of the plans, drawings, and permits as have been prepared for the development of the Project prior to the termination; provided, that Borrower does not covenant to convey the copyright or other ownership rights of third parties.
7.14 Execution in Counterpart. This Agreement may be executed in several counterparts, and all so executed shall constitute one agreement binding on all parties hereto, notwithstanding that all parties are not signatories to the original or the same counterpart.
7.15 Attachments. Attachment Nos. 1-8 attached to this Agreement are incorporated herein by this reference and made a part hereof. Said Attachments are identified as follows:
ATTACHMENT NO. 1 LEGAL DESCRIPTION OF SITE
ATTACHMENT NO. 2 SCHEDULE OF PERFORMANCE
ATTACHMENT NO. 3 PROJECT BUDGET
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ATTACHMENT NO. 4 PROMISSORY NOTE SECURED BY DEED OF TRUST
WITH ASSIGNMENT OF RENTS
ATTACHMENT NO. 5 DEED OF TRUST WITH ASSIGNMENT OF RENTS ATTACHMENT NO. 6 REGULATORY AGREEMENT AND DECLARATION
OF COVENANTS AND RESTRICTIONS
ATTACHMENT NO. 7 BORROWER’S PRO FORMA
ATTACHMENT NO. 8 CERTIFICATE OF COMPLETION
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, City and Borrower have executed this Agreement as of the date set forth above.
“CITY”
CITY OF LAKE FOREST, a California
municipal corporation
By:
Mayor
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
CITY OF LAKE FOREST
HOUSING AUTHORITY
By:
Name: _______________________________
Its:___________________________________
ATTEST:
Secretary
“BORROWER”
NATIONAL COMMUNITY RENAISSANCE
OF CALIFORNIA, a California nonprofit
public benefit corporation
By:
Michael M. Ruane
Its: President
ATTACHMENT 2
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ATTACHMENT NO. 1
LEGAL DESCRIPTION OF SITE
That certain property located in the City of Lake Forest, County of Orange, State of California, described as follows:
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LAKE
FOREST IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL 3, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 140, PAGES 40 AND 41 OF PARCEL MAPS, RECORDS OF SAID ORANGE COUNTY.
ALSO EXCEPTING THEREFROM ALL MINERAL RIGHTS, INCLUDING WITHOUT
LIMITATION ALL OIL, GAS, HYDROCARBON, AND SIMILAR RIGHTS, AND ALL
WATER, WATER RIGHTS, GEOTHERMAL STEAM, POWER WITHIN OR UNDERLYING
SAID PROPERTY, TOGETHER WITH THE PERPETUAL RIGHT OF DEVELOPMENT THEREOF; PROVIDED, HOWEVER, THAT THE RIGHTS THEREIN RESERVED AND
EXCEPTED DO NOT INCLUDE THE RIGHT TO ENTER UPON THE SURFACE AND THE TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED IN DEED FROM OCCIDENTAL LAND, INC., A CALIFORNIA CORPORATION, RECORDED OCTOBER 14, 1977, IN BOOK 12414, PAGE 1152, OFFICIAL RECORDS.
APN 617-491-03; APN 617-491-04
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ATTACHMENT NO. 2
SCHEDULE OF PERFORMANCE
ITEM OF PERFORMANCE TIME FOR PERFORMANCE
1. Borrower provides evidence of insurance
(§ 3.9).
Within 10 days after the Effective Date.
2. Borrower submits final building plans for City's
review and approval (§ 3.6).
within 45 days after the Tax Credit
Allocation Date
3. City approves (or disapproves) final building
plans for Project (§ 3.6).
Within 30 days after a complete submittal.
4. If final building plans are disapproved (Item No.
3), Borrower makes necessary corrections and
revisions and resubmits and uses reasonable
diligence to seek approval of same (§ 3.6).
Within 20 days after notice of disapproval.
5. City approves final building plans for Project
and issues Ready to Issue Permit letter.
Within 150 days after the Tax Credit
Allocation Date.
6. Borrower submits evidence of financial
capability (§ 2.8).
Within 120 days after the Tax Credit
Allocation Date.
7. City’s Finance Director approves (or
disapproves) Borrower's evidence of financial
capability (§ 2.8).
Within 14 days after receipt of submittal.
8. Borrower executes and delivers to City the City
Note, Deed of Trust and Regulatory Agreement
(§ 2.7).
Within 5 days after the satisfaction of all of
the Funding Conditions in Section 2.3(b)-
(g).
9. All of the Funding Conditions are satisfied
(§ 2.4).
Within 180 days after the Tax Credit
Allocation Date, or such earlier time as
provided in the Agreement with respect to
individual Funding Conditions.
10. City executes and records the Deed of Trust and
Regulatory Agreement (§ 2.7).
Within 10 days after the Funding Conditions
Satisfaction Date.
11. City disburses the City Loan to Borrower
(§ 2.5).
After the Funding Conditions Satisfaction
Date.
ATTACHMENT 2
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ITEM OF PERFORMANCE TIME FOR PERFORMANCE
12 City approves Property Management Plan (§5.6) Prior to issuance of building permits.
13. Borrower obtains building permits and
commences construction of the Project (§ 3.7).
Within 180 days after the Tax Credit
Allocation Date.
14. Borrower completes construction of the Project
and obtains City approval of final inspection and
Certificate of Completion (§ 3.7).
Within twenty-four (24) months after
commencement of construction.
It is understood that the foregoing Schedule is subject to all of the terms and conditions of the text of the Agreement. The summary of the items of performance in this Schedule is not intended to supersede or modify the more complete description in the text; in the event of any conflict or inconsistency between this Schedule and the text of the Agreement, the text shall govern.
ATTACHMENT 2
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ATTACHMENT NO. 3
PROJECT BUDGET
SOURCES
Permanent Loan $ 8,324,431
City Loan $ 4,350,000
OCHFT Loan $ 3,490,000
General Partner $ 100 Tax Credit Equity $ 27,063,959 Total $ 43,228,490
USES
Land $ 6,100,000
Fees, Permits, Studies $ 1,485,000 Direct Construction Costs $ 24,434,772 Indirect Construction
Costs $ 3,313,189
Rent Up/Marketing $ 131,000 Financing Costs $ 3,588,103 Other: Reserves, Dev Fee $ 3,064,546 Other: Perm Relocation $ 1,111,880 Total $ 43,228,490
ATTACHMENT 2
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PROMISSORY NOTE SECURED BY DEED OF TRUST
WITH ASSIGNMENT OF RENTS
[INSERT DATE] (the “Note Date”)
FOR VALUE RECEIVED, the undersigned, [CORPORATE NAME], a California [CORPORATE TYPE] (the “Borrower”), promises to pay to the CITY OF LAKE FOREST, a California municipal corporation and the CITY OF LAKE FOREST HOUSING AUTHORITY (collectively referred to herein as the “City”), the sum of $4,350,000.00, together with interest, plus such other costs, charges, and fees which may be owing from time to time, all subject to the terms, conditions, and provisions hereinafter set forth in this Promissory Note Secured by Deed of Trust With Assignment of Rents (the “Note”).
Reference is made to the following (which, together with this Note are sometimes collectively referred to as the “Loan Documents”):
(i) The Affordable Housing and Loan Agreement, with all Attachments thereto, by and between City and Borrower’s predecessor in interest National Community Renaissance of California (the “Developer”), dated _______________, 2025, as may be amended from time to time (the “Affordable Housing Agreement”), which sets forth terms and conditions for Borrower’s development and operation of an affordable apartment project (the “Project”) on that certain real property consisting of approximately 1.6 acres of land area located in the City of Lake Forest, County of Orange, State of California, as more particularly described in the legal description attached as Attachment No. 1 to the Affordable Housing Agreement (the “Site”). Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Affordable Housing Agreement.
(ii) The Regulatory Agreement by and between City and Borrower, in the form attached as Attachment No. 6 to the Affordable Housing Agreement, and recorded against the Site on or about the date of this Note, as may be amended from time to time (the “Regulatory Agreement”). (iii) The Deed of Trust With Assignment of Rents that shall be executed by Borrower for the benefit of City securing the City Loan, and recorded against the Site on or about the date of this Note in the Official Records of Orange County, California, as may be amended from time to time (the “Deed of Trust”).
1. Loan Amount; Interest. The principal amount of the City’s loan to Borrower is $4,350,00.00 (the “City Loan”). Simple interest shall accrue on the outstanding principal balance at the rate of three percent (3%) per annum, or the maximum legal limit, whichever is less, from the date that the permanent loan made to Borrower for the Project funds and records until accrued interest and unpaid principal due hereunder are paid in full. The City Loan shall be ATTACHMENT 2
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disbursed to or for the benefit of Borrower in accordance with the terms set forth in the Affordable Housing Agreement.
2. Terms of Repayment.
(a) Annual Residual Receipt Payments. Commencing the first year in which the Residual Receipts (as defined below) is a positive number, and if the California Department of Housing and Community Development (“HCD”) or any successor entity thereto is a lender on the Project or originates a loan for the Project from a State of California loan program which it administers (such as, for example, a “No Place Like Home” loan), then, consistent with Section 8314(a)(2)(A) of the California Code of Regulations, Title 25, Section 1, Chapter 7, Subchapter 19, borrower shall make annual payments to City in an amount equal to an allocable portion of 50% of the Residual Receipts (as defined below) produced from the operation of the Project based upon the ratio of the initial principal balance of this Note to the respective initial principal balances of all promissory notes evidencing loans to the Project which are paid from Residual Receipts produced from operation of the Project. Payments for each calendar year shall be made on May 31 of the following year. For purposes of this Section 2, the following definitions shall apply
The term “Residual Receipts” shall mean, with respect to any calendar year, the amount of Income for such calendar year reduced by the Expenses for such calendar year.
The term “Income” shall mean all money and income derived by Borrower from the Site, including without limitation all rental income paid by tenants, all rental subsidy payments made by governmental agencies, deposits forfeited by tenants, net proceeds received by Borrower from vending and laundry room machines, and income from any source related to Borrower’s ownership and operation of the Project, but not including the following: tenant deposits unless forfeited, interest received on all required reserve accounts, loan proceeds, capital contributions or loans to Borrower by its partners or similar advances, amounts released from reserves or interest on reserves, or insurance or condemnation proceeds.
The term “Expenses” shall mean the sum of the following:
(i) regularly scheduled non-contingent payments of interest, principal, impounds (so long as required impound expense costs do not duplicate other permitted Expenses), and fees and charges, if any, required on loans in accordance with the original loan documents evidencing such indebtedness, or any amendments or refinancing of such indebtedness consented to by City;
(ii) all normal and necessary expenses actually and reasonably incurred by Borrower in owning, operating, maintaining, repairing, and replacing the Project on the Site, including insurance premiums, taxes and assessments, maintenance and repair expenses (to the extent that such repairs and/or maintenance expenses are not paid out of reserves), utilities (not paid by the tenants), accounting, audit and legal expense attributable to the Project, real property taxes and assessments, office expenses incurred for the operation of the Project; salaries, wages, or other compensation to the employees or agents of Borrower employed on-site, if any, in connection with the ATTACHMENT 2
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maintenance, leasing, administration or operation of the Project, along with all withholding taxes, insurance premiums, social security payments and other payroll taxes or payments; issuer, occupancy and monitoring inspection fees, if any; and the cost of social programs at the Project approved by City ((Expenses will not include depreciation and other similar non-cash expenses, repairs or expenses paid from insurance proceeds and any costs or expenses paid or reimbursed by third parties, and federal and state taxes on income);
(iii) property management fees which shall not exceed six percent (6%) of the gross rental income received by Borrower in connection with its rental of units at the Project for the applicable calendar year;
(iv) deposits and required payments into accounts maintained for operating reserves and/or an operating deficit reserves and/or capital replacement reserves and/or any similar reserve account established and maintained in satisfaction of any lender or investor requirement approved by the City, in an annual amount of $500 per unit per year, or such higher amount as required by a senior mortgagee or the tax credit investor and approved as an Expense by City in its reasonable discretion; (v) reserves for operating expenses in an amount sufficient to pay six (6) months of the expenses referred to in clauses (i)-(iii) above, or such higher amount as required by a senior mortgagee or the tax credit investor and approved as an Expense by City in its reasonable discretion; and any required debt service reserve payment required by the terms of the Amended and Restated Agreement of Limited Partnership of Borrower.
(vi) any asset management fee paid to a limited partner in Borrower not to exceed $7,500 per calendar year;
(vii) any partnership and/or asset management fee paid to a non-profit general partner of Borrower not to exceed $20,000 per calendar year; (viii) payment of any Deferred Developer Fee paid to the “Developer,” which shall be National Community Renaissance of California unless otherwise provided in the Amended and Restated Agreement of Limited Partnership (the “Limited Partnership Agreement”) for Borrower or an assignee of Borrower, approved by the City’s City Manager or designee and City Attorney as provided in the Affordable Housing Agreement, together with interest at the interest rate thereon required to comply with applicable provisions of such Limited Partnership Agreement until such Deferred Developer Fee and interest have been paid in full, all to the extent such Deferred Developer Fee is not paid from capital contributions to Borrower or from other financing proceeds;
(ix) payments to repay (A) any voluntary loan or capital contribution made by the tax credit investor (which has been approved by the City’s City Manager or designee and City Attorney) while acting in its capacity as a limited partner of Borrower (a “tax credit investor”) under the provisions of Borrower’s Limited Partnership ATTACHMENT 2
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Agreement, and (B) any payments to repay any tax credit adjustor(s) which might be required pursuant to applicable provisions of such Limited Partnership Agreement approved by the City; and
(x) and all other fees and expenses which may be permitted by the annual budget approved by the City.
Expenses will be considered “normal and necessary” if incurred generally for similarly structured, financed and restricted rental properties. Expenses shall not include any items paid from any of the reserves described in subsections (iv) and (v) above. Commencing on the first January 1 that occurs after a period of one (1) year has expired since the completion of the Project and on each January 1 thereafter, the fees in subsections (iii), (vi) and (vii) may be increased by three percent (3%) of the then current amount. (b) Maturity Date; Extension. Unless due at an earlier time by virtue of the acceleration of the balance hereof in accordance with Sections 4 or 5 of this Note, any remaining unpaid principal balance of this Note, plus unpaid accrued interest, and any other amounts due hereunder shall be due and payable in a single lump sum payment on the date that is fifty-five (55) years from the date that all units in the Project have received all required occupancy permits from the City, but in no event later than the date that is fifty-seven (57) years after the Note Date. (c) Cost Reductions or Increases. The parties acknowledge and agree that the City Loan is intended to partially finance the financing “gap” of the Project (the amount needed to pay the excess of the Total Development Costs over the financing and other funding sources available to Borrower from all other sources for construction of the Project) but in no event to provide funding (when combined with all other sources of financing and other funding sources available to Borrower for construction of the Project) in excess of the Total Development Costs. The term “Total Development Costs” shall mean the total cost set forth in the Project Budget for the items in the Project Budget under the headings Sources and Uses (the “Development Items”). For purposes of calculating the Total Development Costs, the cost figures for the Development Items shall be those in the Project Budget that is approved in connection with Borrower’s submittal of its evidence of financial capability to develop the Project pursuant to Section 2.8 of the Affordable Housing Agreement. The term “Actual Development Costs” shall mean the actual and reasonable expenses incurred by Borrower for the Development Items. If the Actual Development Costs exceed the sum of all financing and other funding sources available to Borrower for construction of the Project (the difference being a “Project Deficit”), Borrower shall be solely responsible for causing payment (through third party financing or other funds or through deferring payment of Developer Fee) of the Project Deficit. If the Actual Development Costs are less than the sum of the financing and other funding sources available to Borrower for construction of the Project (the difference being a “Project Surplus”), then the Project Surplus shall be applied first to pay the deferred developer fees and then to reduce or repay the City Loan, unless otherwise required by other project funding sources.
(d) Late Charge. If Borrower fails to timely make a required payment within 10 days following the due date of such payments, interest at the rate of ten percent (10%) per ATTACHMENT 2
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annum or the maximum legal rate then applicable, whichever is less, shall accrue on the outstanding installment amount due dating from the day when that installment payment was due. (e) Prepayment. Borrower shall have the right to prepay all or any portion of this Note at any time without penalty.
(f) Application of Payments. All payments shall be first credited to accrued and unpaid interest, next to costs, charges, and fees which may be owing from time to time, and then to reduction of the outstanding principal balance. All payments shall be made in lawful money of the United States.
(g) Place of Payment. Payments shall be made to City at 100 Civic Center Drive, Lake Forest, California, 92630 or at such other address as City or the holder of this Note may direct pursuant to written notice delivered to Borrower.
3. Records; Audit. Borrower shall submit to City on or before the date that is 90 days following the end of each calendar year a draft of an audited financial statement of Borrower for the preceding calendar year prepared by an independent professional accountant of Borrower's choosing in accordance with generally accepted accounting principles, showing in reasonably accurate detail the anticipated amount of Residual Receipts for the calendar year covered by the draft audited financial statement. The final Borrower audited financial statement shall be delivered to the City within 120 days following the end of each calendar year.
Remittance of any payment due to the City shall be delivered to the City within 150 days following the end of each calendar year. Within 90 days following the end of each calendar year, Borrower shall also submit to the City a balance sheet, statement of income and expense and cash flows prepared by Borrower's accountant in accordance with generally accepted accounting principles and accompanied by an accountant report and opinion (provided, however, a calculation of Residual Receipts shall not be due until 150 days after the close of each calendar year). The reports and certificates referred to herein shall be in such form and contain such details and breakdown as the City may deem reasonably acceptable. The acceptance by City of payments shall be without prejudice to City's right to an examination of the books and records of Borrower in order to verify the amount of Residual Receipts. Borrower shall keep and maintain full, complete, accurate and auditable books, records and accounts of all Income and Expenses for a calendar year or partial calendar year until the date that it is at least 4 years after the installment payment for such year is made. City and its designated agents and employees shall have the right at reasonable times upon request, to examine and inspect all of the books and records of Borrower for the purpose of investigating and verifying the accuracy of any payment by Borrower. In addition, City may twice in any calendar year cause an audit of Borrower’s books and records to be made by an independent certified accountant of City’s selection, and if the statement of the amount due to City made by Borrower shall be found to be inaccurate, then and in that event, there shall be an adjustment and one party shall pay to the other on demand such sums as may be necessary to settle in full the accurate amount that should have been paid for the period or periods covered by such inaccurate statement and payment, together with interest on any past due amounts in accordance with Section 2(d) herein. If said audit shall disclose an inaccuracy in favor of Borrower which resulted in an underpayment greater than three percent (3%) for the applicable period, then Borrower shall immediately pay to City the cost of such audit; otherwise, the cost of such audit shall be paid by City. If City requests an ATTACHMENT 2
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inspection or makes an audit as set forth herein, the necessary books and records shall be produced at the Site within five (5) business days after request therefor.
4. Default. Borrower shall be deemed in default of this Note in the event (i) Borrower fails to timely make a required payment within ten (10) days following the due date of any payment due hereunder, or (ii) Borrower is in default of any of the other terms of this Note and such default is not cured within thirty (30) days after Borrower’s receipt of written notice from City specifying the event constituting the default, or (iii) Borrower is in default of the Affordable Housing Agreement, at any time when the Affordable Housing Agreement is in force, but not after the City has issued its Certificate of Compliance (which is the deemed termination date for the Affordable Housing Agreement),the Deed of Trust, or the Regulatory Agreement or on any obligations under any documents relating to any other financing that is secured by the Site, and fails to timely cure such default under the terms of the applicable agreement, or within thirty (30) days of receipt of notice from City if there is no cure period, it being understood and agreed by Borrower that a default of any of the foregoing agreements shall be a default of this Note. If the Borrower fails to take corrective action to cure a default within the time limits provided in this Note, and providing that the City shall have been provided with an address for notice for the tax credit investor and, if any, a special limited partner (a “special limited partner”), City shall concurrently with notice to the Borrower also give written notice of such default to the tax credit investor and the special limited partner. In such event, the tax credit investor and the special limited partner shall have the same time period as that given to Borrower hereunder to cure such default; provided, however, if the tax credit investor and the special limited partner find it necessary to remove the general partner of the Borrower (a “General Partner”) in order that such parties may cure such default, then the tax credit investor and the special limited partner may remove and replace the General Partner with a substitute general partner which is the special limited partner or is a nonprofit entity reasonably acceptable to the City, upon City’s written approval, such removal and replacement to be completed in accordance with language for the same in the Limited Partnership Agreement which has been approved by the City. Such replacement general partner shall affect a cure of any such default within the time period set out in this Note provided for the cure of such default. The City agrees to accept on the same basis as if made by Borrower any corrective action to cure or remedy any default which might be tendered by any tax credit investor or special limited partner (which party shall be under no obligation to tender any such cure or remedy). Additionally, in the event that a tax credit investor or special limited partner is precluded from curing a default of Borrower due to an inability to remove the General Partner of Borrower as a result of a bankruptcy, injunction, or similar proceeding by or against Borrower or its General Partner, providing that the tax credit investor or special limited partner proceeds promptly and with reasonable diligence to remove the General Partner of the Borrower under such circumstances and provides the City with evidence reasonably demonstrating the same, the City agrees to forebear from completing a foreclosure (judicial or non-judicial) during the period during which the tax credit investor and the special limited partner are so precluded from acting. In no event shall the City be precluded from exercising any of its remedies in the event of a Borrower default under this Note if the City’s security becomes or is to become materially jeopardized by a failure to cure a default or by the default itself. If a default of this Note is not cured or remedied as provided in this Section 4, the City may it its option exercise any of its remedies hereunder, including accelerating the required full payment of this Note.
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5. Acceleration Upon Sale, Lease, Encumbrance, Refinance. To the extent permitted by applicable law, in addition to City’s acceleration rights under Section 4, if Borrower shall (i) directly or indirectly, voluntarily or involuntarily, sell, assign, transfer, dispose of, alienate, encumber, lease, or agree to sell, assign, transfer, dispose of, alienate, encumber, lease all or any portion of any interest in the Site (excluding the lease of the units on the Site in accordance with the Regulatory Agreement, the lien of the Permitted Encumbrances, any other assignment, transfer, or encumbrance approved in writing by City, and any transfer permitted by the terms of the Affordable Housing Agreement); or (ii) refinance any lien or encumbrance which has priority over the Deed of Trust for a loan amount in excess of the then outstanding sum secured by such lien or encumbrance together with the reasonable cost to effect such refinance or further encumber the Site except as approved by City’s City Manager or designee and City Attorney, then, or at any time thereafter, City, at its option, may declare the entire indebtedness evidenced hereby immediately due and payable. Notwithstanding anything to the contrary contained herein, the following transactions shall be deemed expressly permitted hereunder: (a) transfer by a tax credit investor or a special limited partner of the Borrower to any other entity which is an affiliate of such parties or which is controlled by such parties, so long as such transfer is in compliance with the applicable terms of the Limited Partnership Agreement which has been approved by the City’s City Manager or designee and City Attorney; (b) a change in the beneficial ownership of the tax credit investor or special limited partner so long as each such entity remains controlled by the ownership entity therefore or an affiliate thereof and such change in ownership is in compliance with applicable provisions of the Limited Partnership Agreement which has been approved by the City’s City Manager or designee and City Attorney; (c) the pledge or encumbrance of the interests of the tax credit investor or the special limited partner to or for the benefit of any financial institution which enables the tax credit investor to make its capital contributions to the Borrower, as well as provision of a collateral interest given to such financial institution if and as customary in similar tax credit projects; and (d) removal of any General Partner in Borrower by the tax credit investor or the special limited partner and replacement of any removed General Partner with (y) a General Partner that is an affiliate of the tax credit investor pursuant to the applicable provisions of the Limited Partnership Agreement with notice to the City’s City Manager, or (z) a General Partner that is not an affiliate of the tax credit investor with the approval of the City’s City Manager or designee and City Attorney, which consent shall not be unreasonably conditioned, delayed, or withheld.
6. Collection Costs; Litigation. If this Note is not paid when due, whether at maturity or by acceleration, Borrower promises to pay all costs of collection, including, but not limited to, attorneys’ fees and all expenses incurred in connection with the protection or realization of the collateral securing the payment hereof or enforcement of any guarantee, incurred by City on account of such collection, whether or not suit is filed hereon. In any litigation between the parties arising out of this Note, the Superior Court of the State of California in and for the County of Orange shall have exclusive jurisdiction.
7. Waivers. To the extent permitted by law, Borrower and all endorsers, guarantors, and persons liable or to become liable on this Note waive presentment, protest, and demand, notice of protest, demand, and dishonor and nonpayment of this Note and any and all other notices or matters of a like nature, and consent to any and all renewals and extensions near the time of payment hereof and agree further that at any time and from time to time without notice, the terms of payment herein may be modified or the security described in any documents ATTACHMENT 2
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securing this Note released in whole or in part or increased, changed, or exchanged by agreement between City and any owner of the premises affected by said documents securing this Note, without in any way affecting the liability of any party to this Note or any persons liable or to become liable with respect to any indebtedness evidenced hereby.
8. No Waiver by City. No waiver of any breach, default, or failure of condition under the terms of this Note or the Deed of Trust or the obligations secured thereby shall be implied from any failure of City to take, or any delay be implied from any failure by City in taking, action with respect to such breach, default, or failure from any prior waiver of any similar or unrelated breach, default, or failure.
9. Usury. Notwithstanding any provision in this Note, the Deed of Trust, or other document securing same, the total liability for payment of any interest shall not exceed the limit now imposed by applicable laws of the State of California.
10. Not Assignable. This Note shall not be assignable or assumable without the express written consent of City, which may be given or withheld in City’s sole and absolute discretion.
11. Severability; Governing Law; Amendment. The unenforceability or invalidity of any provision or provisions of this Note as to any persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other provisions or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable.
This Note has been executed and delivered by Borrower in the State of California and is to be governed and construed in accordance with the laws thereof. Neither this Note nor any term hereof may be waived, amended, discharged, modified, changed, or terminated orally; nor shall any waiver of any provision hereof be effective except by an instrument in writing signed by Borrower and City.
12. Non-Recourse Provisions. This Note shall become a nonrecourse obligation of Borrower on the date that construction of the Project is completed as evidenced by issuance by City of a certificate of occupancy for all of the units in the Project. At such time as this Note becomes nonrecourse, City agrees that Borrower and its constituent partners (the “Nonrecourse Parties”) shall not be personally liable for the payment of any sums now or hereafter owing City under the terms of this Note. If any default should occur under the Loan Documents, City agrees that its rights, as to the Nonrecourse Parties, for any monetary claim shall be limited to a proceeding against the security for the indebtedness evidenced by this Note, and that it shall have no right to proceed directly against the Nonrecourse Parties for the satisfaction of any monetary claim against Borrower or for any deficiency judgment remaining after foreclosure of any real or personal property securing the obligations owed to City under this Note and the Loan Documents. It is expressly understood and agreed, however, that nothing contained in this Section 12 shall in any manner or way constitute or be deemed a release of the debt evidenced by the Note or otherwise affect or impair the enforceability against Borrower of the liens, deeds of trust, assignments, rights and security interests created by the Deed of Trust or any other instrument or agreement evidencing, securing or related to the indebtedness evidenced by the Note. Nothing in this Section 12 shall: (a) preclude City from foreclosing the lien of the Deed of Trust or from enforcing any of its rights or remedies in law or in equity against Borrower or ATTACHMENT 2
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its assets except as stated in this Section 12; (b) impair, in any manner, any right, remedy or recourse City may have against any party executing a guaranty or indemnity or any obligor of a performance or payment bond furnished under the Loan Documents pursuant to such performance or payment bond; (c) impair, in any manner, any right, remedy or recourse City may have against the Borrower or its General Partner for fraud, waste or a material breach of any of the representations and warranties contained in any of the Loan Documents; (d) impair, in any manner, any right, remedy or recourse City may have against the Borrower or its General Partner for indemnification under any of the Loan Documents; (e) impair, in any manner, any right, remedy or recourse City may have against the Borrower or its General Partner for Borrower’s failure to procure or maintain policies of insurance required by City to the extent of any loss proceeds which would have been generated by an uninsured loss which Borrower was required to insure against, but failed to insure against, as or if required by the Deed of Trust and the Regulatory Agreement; (f) impair, in any manner, any right, remedy or recourse City may have against the Borrower or its General Partner for any prohibited sale, transfer, conveyance or encumbrance in breach of any of the Loan Documents; or (g) impair, in any manner, any right, remedy or recourse City may have against the Borrower or its General Partner as a result of any right, remedy or recourse to which City has been subrogated for any reason (other than to the extent Borrower has paid or performed the obligation to which City has been subrogated). [SIGNATURE ON NEXT PAGE]
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IN WITNESS WHEREOF, Borrower has executed this Note as of the date first above written. “BORROWER”
[CORPORATE NAME], a California
[CORPORATE TYPE]
By:
[NAME], [POSITION]
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ATTACHMENT NO. 5
DEED OF TRUST WITH ASSIGNMENT OF RENTS
[Attached]
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
CALIFORNIA ALL-PURPOSE NOTARY ACKNOWLEDGMENT NOTARY CIVIL CODE § 1189
STATE OF CALIFORNIA
COUNTY OF ORANGE
On _____, before me,
,
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of
the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature of Notary Public
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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Lake Forest
100 Civic Center Drive
Lake Forest, CA 92630
Attn: City Manager
______________________________________________________________________________ SPACE ABOVE FOR RECORDER’S USE ONLY
EXEMPT FROM RECORDING FEE PER
GOVERNMENT CODE §27383
DEED OF TRUST WITH ASSIGNMENT OF RENTS
(This Deed of Trust Contains an Acceleration Clause)
THIS DEED OF TRUST is made this ___ day of ______________, 2025, by and among [CORPORATE NAME], a California [CORPORATE TYPE] (the “Trustor”), whose address is [CORPORATE ADDRESS], attn.: [CORPORATE CONTACT], the CITY OF LAKE FOREST, a California municipal corporation (the “Trustee”), and the CITY OF LAKE FOREST, a California municipal corporation, and the CITY OF LAKE FOREST HOUSING AUTHORITY ( collectively herein referred to as the “Beneficiary”).
1. Grant In Trust. For the purposes and upon the terms and conditions in this Deed of Trust, Trustor grants, transfers, and assigns to Trustee, in trust, with power of sale and right of entry and possession, the following property and any interest therein (collectively, the “Trust Estate”): (i) the real property located in the City of Lake Forest, County of Orange, State of California described in Exhibit “A” attached hereto and incorporated herein by this reference (the “Real Property”); (ii) all buildings and other improvements and structures now or hereafter located on the Real Property (collectively, the “Improvements” and together with the Real Property shall sometimes be referred to as the “Property”); (iii) all existing and future leases, subleases, subtenancies, licenses, agreements and incentives relating to the use, occupancy or enjoyment of all or any part of the Property, together with any and all guaranties and other agreements relating to or made in connection with any of the foregoing (individually, a “Lease”, and collectively, the “Leases”); and (iv) all rents, issues, income, revenues, royalties, profits, proceeds and earnings now or hereafter payable with respect to or otherwise derived from the ownership, use, management, operation, leasing or occupancy of the Property, including, without limitation, cash or security deposited under any of the Leases to secure the performance by the lessees of their obligations thereunder (collectively, the “Rents”).
2. Obligations Secured. Trustor makes this grant and assignment for the purpose of securing the following: (i) payment of the sum of $4,350,000.00, with interest thereon according to the terms of a Promissory Note secured by Deed of Trust with Assignment of Rents of even date herewith made to Trustor, payable to the order of Beneficiary, and any extensions or renewals thereof (the “Note”), and all other amounts due under the Note; (ii) and payment of additional ATTACHMENT 2
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sums and interest thereon which may hereafter be loaned to Trustor, or its successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust.
3. Right of Acceleration upon Sale/Encumbrance, Default. In the event Trustor shall: (i) directly or indirectly, voluntarily or involuntarily, sell, assign, transfer, dispose of, alienate, encumber, lease, or agree to sell, assign, transfer, dispose of, alienate, encumber, or lease all or any portion of any interest in the Property (excluding the lease of the units on the Property in accordance with that certain Regulatory Agreement between Trustor and Beneficiary dated on or about the date hereof and recorded against the Real Property (the “Regulatory Agreement”), any transfer at any time prior to the Beneficiary’s issuance of a Certificate of Completion (as such term is defined in the Loan Agreement) permitted by the terms of the Affordable Housing and Loan Agreement between Trustor and Beneficiary dated [INSERT DATE], as amended from time to time (the “Affordable Housing and Loan Agreement” or, sometimes, the ”Loan Agreement”), and any transfer permitted by the lien of the Permitted Encumbrance; or (ii) refinance any lien or encumbrance which has priority over this Deed of Trust for a loan amount in excess of the then outstanding sum secured by such lien or encumbrance together with the reasonable cost of such refinance, or further encumber the Property; or (iii) default on any of its obligations set forth in the Loan Documents or on any obligations under any documents relating to any other financing that is secured by the Property and fail to cure the default within any applicable cure period or within thirty (30) days of receipt of notice from Beneficiary if there is no cure period, then, or at any time thereafter, Beneficiary, at its option, may declare the entire indebtedness evidenced by the Note secured by this Deed of Trust immediately due and payable. This term “Loan Documents” shall mean this Deed of Trust, the Note, the Affordable Housing and Loan Agreement (at any time prior to Beneficiary’s issuance of a Certificate of Completion), and the Regulatory Agreement, as such agreements may be amended from time to time. Any capitalized terms contained in this Deed of Trust which are not defined herein shall have the meaning given in the Loan Agreement, unless expressly provided to the contrary.
4. Assignment of Rents and Performance of Leases.
4.1 Assignment of Rents and Leases. Trustor hereby irrevocably absolutely and unconditionally assigns and transfers to Beneficiary all of Trustor’s right, title and interest in and to the Leases and the Rents; provided, however, that so long as no Event of Default (as defined in Section 5.1 below) has occurred and is continuing, Trustor shall have the right under a license granted hereby to collect and receive all Rents as Trustee for the benefit of Beneficiary and to apply the amounts so collected first to the payment of costs and expenses associated with the ownership, maintenance, operation and leasing of the Property, including, principal, interest and all other amounts required to be paid under the Loan Documents, before using or applying such Rents for any other purpose. No Rents or such other income shall be distributed or paid to Trustor, unless such costs and expenses which are then due have been paid in full. Thereafter, so long as no Event of Default has occurred and is continuing, the balance may be distributed to Trustor. If an Event of Default has occurred and is continuing, Trustor’s right to collect and receive the Rents under the license granted hereby shall cease and the license shall be revoked automatically and, pursuant to Section 5.2.1 hereof, Beneficiary shall have the right, with or without taking possession of the Property, to collect all Rents; provided, however, if such Event of Default is cured, then such license shall be automatically reinstated. This is an absolute assignment and not an assignment for security only.
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4.2 Covenants Regarding Leases. Trustor shall not, without the prior written consent of Beneficiary, (i) collect any rent from any lessee for a period of more than one (1) month in advance, or (ii) execute any further assignment of any of its right, title and interest in the Leases and the Rents, except in connection with financing otherwise approved by the Beneficiary. Trustor shall (i) observe, perform and discharge each and every obligation, term, covenant, condition and agreement of Trustor under the Leases in all material respects, (ii) enforce the performance of each and every obligation, term, covenant, condition and agreement in the Leases to be performed by any lessee or guarantor thereof in all material respects, (iii) use good faith commercially reasonable efforts to keep the Property leased at a good and sufficient rental (but at affordable rents in accordance with the Regulatory Agreement) and on such other terms and conditions as are reasonably acceptable to Beneficiary, and (iv) execute and deliver to Beneficiary upon demand, at any time and from time to time, any and all assignments and other instruments which Beneficiary may deem reasonably advisable to carry out the true purposes and intent of the assignment set forth in Section 4.1 above.
5. Events of Default and Remedies.
5.1 Events of Default. Any of the following events shall, at Beneficiary’s option, constitute an event of default (an “Event of Default”) hereunder:
5.1.1 Failure to Pay. The failure of Trustor to pay (i) within ten (10) days of its due date, any installment of principal or interest under the Note (except at maturity, by acceleration or as part of a prepayment hereunder); (ii) all outstanding principal and accrued interest under the Note at maturity, by acceleration or as part of a prepayment thereunder; or (ii) within ten (10) days after written notice that same is due, any sum as provided in this Deed of Trust or any other Loan Document or any other instrument or agreement secured hereby (other than as described in the foregoing (i) and (ii)).
5.1.2 Failure to Perform. The failure of Trustor to promptly and completely observe or perform any term, condition, covenant, agreement or obligation contained in this Deed of Trust, any other Loan Document or any other instrument or agreement secured hereby, and the continuation of such failure following the expiration of any applicable notice, cure or grace period, if any, provided for therein or herein; provided, however, that in the event no cure or grace period is otherwise provided for herein or therein, such failure shall not be an Event of Default hereunder if Trustor observes or performs such term, condition, covenant, agreement or obligation within thirty (30) days of receipt of written notice from Beneficiary of Trustor’s failure to observe or perform any such term, condition, covenant, agreement or obligation (or if not reasonably susceptible of cure within thirty (30) days, then for a reasonable time thereafter provided the cure is commenced in thirty (30) days and diligently and continuously prosecuted to a cure within sixty (60) additional days thereafter).
5.1.3 Other Defaults. The occurrence of any “default” or “Event of Default” under any of the other Loan Documents (as defined therein) or any other instrument or agreement secured hereby and the continuation of such “default” or “Event of Default” following the expiration of any applicable notice, cure or grace period, if any, provided for in such other Loan Document or such other instrument or agreement secured hereby.
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5.1.4 Notwithstanding anything to the contrary contained herein, any notice required to be given to Trustor under this Deed of Trust shall also be given to any investor at the address set forth in the Affordable Housing and Loan Agreement. Investor shall have the right, but not the obligation, to cure any default of the Trustor hereunder.
5.2 Remedies. During the existence of any Event of Default, Beneficiary may, at its option, declare all indebtedness secured hereby, and the same shall thereupon become, immediately due and payable without any presentment, demand, protest or notice of any kind.
Thereafter, Beneficiary may, at its option:
5.2.1 Termination of License. Subject to the provisions of Section 5.1 hereof, terminate Trustor’s right and license to collect the Rents, and either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Trust Estate or any part thereof, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to preserve the value, marketability or rentability of the Trust Estate, or any part thereof or interest therein, make, modify, enforce, cancel or accept the surrender of any Lease, increase the income therefrom or protect the security hereof and, with or without taking possession of the Trust Estate, sue for or otherwise collect the Rents, including those past due and unpaid, and apply the same, less reasonable, actual, out-of-pocket costs and expenses of operation and collection, including, without limitation, reasonable, actual, out-of-pocket attorneys’ fees, upon any indebtedness secured hereby, all in such order as Beneficiary may determine. The entering upon and taking possession of all or any portion of the Trust Estate, the collection of such Rents and the application thereof as aforesaid, or any of such acts, shall not cure or waive any Event of Default or recorded notice of default hereunder or invalidate any notice or act done in response to such Event of Default or pursuant to such notice of default and, notwithstanding the continuance in possession of all or any portion of the Trust Estate or the collection, receipt and application of Rents, Trustee or Beneficiary shall be entitled to exercise every right provided for in any of the Loan Documents or by law during the existence of any Event of Default, including the right to exercise the power of sale. Failure of Beneficiary at any time, or from time to time, to collect the Rents shall not in any manner affect the subsequent enforcement of Beneficiary of the right to collect the same.
5.2.2 Appointment of Receiver. As a matter of right and without notice to Trustor or anyone claiming under Trustor, and without regard to the then value of the Trust Estate or the interest of Trustor therein, to apply to any court having jurisdiction to appoint a receiver or receivers of the Trust Estate, and Trustor hereby irrevocably consents to such appointment and waives notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of Beneficiary in case of entry as provided in this Deed of Trust and shall continue as such and exercise all such powers until the later of (i) the date of confirmation of sale of the Trust Estate, (ii) the disbursement of all proceeds of the Trust Estate collected by such receiver and the payment of all expenses incurred in connection therewith, and (iii) the termination of such receivership with the consent of Beneficiary or pursuant to an order by a court of competent jurisdiction.
5.2.4 Judicial Foreclosure of Deed of Trust. Commence an action to foreclose this Deed of Trust as a mortgage, or specifically enforce any of the covenants hereof.
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5.2.5 Power of Sale. Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to cause Trustor’s interest in the Trust Estate or any portion thereof to be sold, which notice Trustee or Beneficiary shall cause to be transmitted and recorded, if applicable, in accordance with governing law. Upon receipt of such notice from Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such Notice of Default and after Notice of Sale having been given as required by law, sell the Trust Estate at the time and place of sale fixed by it in said Notice of Sale, either as a whole, or in separate lots or parcels or items as Beneficiary shall deem expedient, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States payable at the time of sale. Trustor hereby expressly waives any right which it may have to direct the order in which any of the Trust Estate may be sold when it consists of more than one lot or parcel, and such order of sale, whether in a single sale or in multiple sales held on different days or at different times, shall be at the sole discretion of Beneficiary. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.
Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale to the extent permitted by law. After deducting all costs, fees and expenses of Trustee and of this Deed of Trust and all reasonable, actual out-of-pocket costs, fees and expenses of Beneficiary, including reasonable, actual, out-of-pocket costs of evidence of title, and attorneys’ fees of Trustee and Beneficiary, in connection with such sale, and subject to applicable law, Trustee shall apply, in the following priority, the proceeds of sale to payment of: (i) first, all sums expended under the terms hereof, not then repaid, with interest thereon according to the terms of the Debt Instrument, (ii) second, all other sums then secured hereby, in such order of priority and in such proportion as Beneficiary in its sole discretion may elect, and (iii) the remainder, if any, to the person or persons legally entitled thereto. Subject to applicable law, Trustee may postpone the sale of all or any portion of the Trust Estate by public announcement at the time and place of such sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement or subsequently noticed sale, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new notice of sale.
5.2.6 Other Remedies. Exercise all other rights and remedies provided herein, in any Loan Document or other document or agreement now or hereafter securing all or any portion of the obligations secured hereby, or provided by law. During the existence of an Event of Default hereunder, Beneficiary may proceed in any sequence to exercise its rights hereunder with respect to all or any portion of the Trust Estate.
5.2.7 Non-Recourse. The obligations of Trustor under the Note and this Deed of Trust are non-recourse to the extent provided in paragraph 12 of the Note.
5.3 Remedies Not Exclusive; Waiver . No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Loan Documents to Trustee or Beneficiary, or to which either of ATTACHMENT 2
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them may be otherwise entitled, may be exercised concurrently or independently, from time to time and as often as may be deemed expedient by Trustee or Beneficiary. If there exists additional security for the obligations secured hereby, Beneficiary, at its sole option, and without limiting or affecting any of the rights or remedies hereunder, may exercise any of the rights or remedies to which it may be entitled hereunder either concurrently with whatever rights it may have in connection with such other security or in such order and in such manner as Beneficiary may deem fit without waiving any rights with respect to such other security.
6. Incorporation of Fictitious Deed of Trust . To protect the security of this Deed of Trust, and with respect to the Property above described, except where such terms and provisions are contrary to any of the provisions set forth in Section 1 through and including Section 5 above (and all of the subparts thereof), in which case the provisions hereof shall control, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, namely:
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COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BO OK
PAGE
Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762 Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 128 7 621
Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 206 7 427
Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 197 0 56
Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585 Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183 Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 253 0 108
Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 2065 881 Ventura 260 7 237
Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693 Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774 shall inure to and bind the parties hereto, with respect to the Property. Said agreements, terms and provisions contained in said subdivision A and B are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein.
OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT Individual
Corporate Officer
Title(s) Title or Type of Document
Partner(s) Limited
General
Attorney-In-Fact Number Of Pages
Trustee(s)
Guardian/Conservator
Other: August 12, 2020
Signer is representing:
Name Of Person(s) Or Entity(ies)
Date Of Document
Signer(s) Other Than Named Above
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Trustor has caused this Deed of Trust to be executed as of the date set forth above. “TRUSTOR”
[CORPORATE NAME], a California
[CORPORATE TYPE]
By:
[NAME], [POSITION]
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DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.
A. To protect the security of this Deed of Trust, Trustor agrees:
1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. 2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney’s fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. 4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust.
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary of Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same is such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees.
5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from the date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded.
B. It is mutually agreed:
1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof. 4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The Grantee in such reconveyance may be described as “the person or persons legally entitled thereto.”
5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or be a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney’s fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 6) That upon default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.
After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest ATTACHMENT 2
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bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto.
7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. 8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.
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EXHIBIT “A” TO DEED OF TRUST
LEGAL DESCRIPTION OF REAL PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LAKE
FOREST IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF LAKE
FOREST IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL 3, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 140, PAGES 40 AND 41 OF PARCEL MAPS, RECORDS OF SAID ORANGE COUNTY.
ALSO EXCEPTING THEREFROM ALL MINERAL RIGHTS, INCLUDING WITHOUT
LIMITATION ALL OIL, GAS, HYDROCARBON, AND SIMILAR RIGHTS, AND ALL
WATER, WATER RIGHTS, GEOTHERMAL STEAM, POWER WITHIN OR UNDERLYING
SAID PROPERTY, TOGETHER WITH THE PERPETUAL RIGHT OF DEVELOPMENT THEREOF; PROVIDED, HOWEVER, THAT THE RIGHTS THEREIN RESERVED AND
EXCEPTED DO NOT INCLUDE THE RIGHT TO ENTER UPON THE SURFACE AND THE TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED IN DEED FROM OCCIDENTAL LAND, INC., A CALIFORNIA CORPORATION, RECORDED OCTOBER 14, 1977, IN BOOK 12414, PAGE 1152, OFFICIAL RECORDS.
APN 617-491-03; APN 617-491-04
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ATTACHMENT NO. 6
REGULATORY AGREEMENT
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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Lake Forest
100 Civic Center Drive
Lake Forest, CA 92630
Attn: City Manager
______________________________________________________________________________ SPACE ABOVE FOR RECORDER’S USE ONLY
EXEMPT FROM RECORDING FEE PER
GOVERNMENT CODE §27383